Oil Rises as Flows Slow Amid U.S. Strikes, Iranian Threats


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Oil and product futures edged higher Thursday (7/16) 
morning, with crude futures hovering near one-month highs after rallying by as 
much as 12% this week.

   By 08:10am ET, ICE Brent for September delivery was up $0.27 to trade near 
$85.22 bbl, and NYMEX WTI for August delivery rose $0.44 to $80.04 bbl.

   Downstream, NYMEX ULSD futures for August delivery advanced $0.0472 to 
$3.9955 gallon, and front-month RBOB futures rose $0.0374 to $3.3383 gallon.

   The US dollar index inched higher by 0.066 points to 100.34 against a basket 
of foreign currencies.

   Oil exports from the Persian Gulf have slowed amid the most recent military 
escalation, but a handful of tankers continued to traverse the Strait of Hormuz 
via the U.S.-protected corridor along the Omani coast, easing concerns over an 
immediate supply shock.

   The U.S., meanwhile, launched new strikes on Iran, as well as on an 
Iran-flagged VLCC that was signaling for the country's main oil export hub at 
Kharg Island. U.S. President Donald Trump has in recent days repeatedly 
threatened to widen the scope of attacks should Iran not reopen the strait, and 
mentioned the possibility of striking bridges, power plants and other energy 
infrastructure.

   In reaction, Iran's Islamic Revolutionary Guard Corps reiterated its threat 
of closing other vital shipping lanes via its proxies, first and foremost 
Bab-el-Mandeb, which connects the Red Sea to the Gulf of Aden. The 
Tehran-aligned Houthi militia in Yemen has in the past attacked ships 
attempting to cross the strait at the Horn of Africa, forcing shippers to 
reroute around the Cape of Good Hope.

   A large diesel inventory build in the U.S., meanwhile, last week snapped a 
16-week draw streak in total petroleum inventories, Energy Information 
Administration data released Wednesday (7/15) showed. Crude oil inventories, 
however, continued to decline amid strong domestic refiner demand, and gasoline 
stockpiles, already at a 14-year seasonal low, receded further as well. At 
210.5 million bbl, nationwide gasoline inventories are now 9.6% below year-ago 
levels and 8.4% below the seasonal five-year average.




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