Oil Prices Steady Amid Hormuz Supply Disruptions


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Oil prices held steady Wednesday (3/4) after a two-day 
rally amid signs that the Middle East's petroleum trade could remain suspended 
longer than thought as Iran struck at its neighbors to drag them into its war 
with the U.S. and Israel.

   At the close, NYMEX WTI crude futures for April delivery settled up $0.10, 
or 0.1%, at $74.66 bbl, after an 11% rally over two prior sessions that took 
the U.S. crude benchmark to a 14-month high of $77.98 bbl.

   ICE Brent crude for May delivery finished unchanged at $81.40 bbl, after 
hitting a 20-month high of $85.12 earlier in the session.

   Downstream, ULSD futures for April extended its streak of daily gains for a 
third consecutive session, rising by $0.0970 to $3.2839 gallon, after climbing 
$3.3692 in the previous session, its highest since December 2022.

   RBOB futures for April delivery climbed by $0.0561 to $2.5135 gallon, after 
setting a 20-month high of $ 2.5328 this week.

   The U.S. dollar index dropped by 0.266 points to 98.74 against a basket of 
currencies, after a three-month high of 99.68 previously.

   Maersk, which moves roughly 17% of all global container trade, said it was 
temporarily suspending acceptance of cargo bookings in and out of the UAE, 
Oman, Iraq, Kuwait, Qatar, Bahrain, and Saudi Arabia until further notice, 
according to media reports.  Most of those countries have been targeted by 
Iranian missiles since the start of the U.S.-Israel military campaign against 
Iran at the weekend.

   Iranian forces' strikes on ships entering the Strait of Hormuz have 
effectively eliminated a fifth of petroleum liquid supply that relied on the 
waterway bordered by Iran, Oman and the UAE. Reports said tanker traffic on the 
strait has dropped by at least 90%. The commander of the Iran Revolutionary 
Guards Navy Alireza Tangsiri added on state media that any ship carrying cargo 
for Israel in the Gulf, regardless of its flag, would be targeted.

   "It's a complete mess at this moment, the dimensions and scale of which I 
don't think the world had anticipated," a hedge fund manager in oil told DTN. 
"Iran has virtually blockaded the Hormuz while firing missiles at neighbors 
that host U.S. and Israeli bases. No one can say for sure how long this will 
drag and the market is trying to hedge the immediate loss of barrels with 
supply that will be piling up in storage."

   U.S. President Donald Trump initially projected a four-to-five-week timeline 
for the war but said Tuesday (3/3) that he was in no hurry to end the conflict, 
prioritizing Tehran's defeat over an expedient finish. The president also 
pledged U.S. navy protection for tankers needing to cross the Hormuz other than 
offering to help out with maritime insurance for shippers facing difficulty in 
covering their cargoes.

   Adding to the supply crunch was Iraq's decision to slash oil output it could 
not ship out due to the situation at the Hormuz. OPEC's second-largest producer 
announced an immediate reduction of 1.5 million bpd from its regular output of 
4.5 million bpd, warning that the cuts could double as it faced a shortage of 
tanks to store oil it could not export.

   On the U.S. inventory front, crude stocks rose by 3.5 million bbl to 439.3 
million bbl last week, the highest in 10 months, the Energy Information 
Administration reported.

   Distillate fuel oil inventories also rose, by 400,000 bbl, after the 
previous week's 300,000-bbl tumble. Jet fuel stocks slipped by 200,000 bbl, 
along with gasoline inventories, which fell 1.7 million bbl to extend their 
decline for a third consecutive week.




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