Oil Prices Rally as Trump Weighs Strikes on Iran


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Crude oil futures jumped Thursday (1/29) morning on concerns 
of a U.S. military strike on Iran, the fourth largest oil producer within OPEC 
with an output of 3.2 million bpd. Shrinking U.S. crude inventories lent 
additional support.

   WTI futures for March delivery jumped $1.94 to $65.15 bbl, and ICE Brent for 
March delivery rallied $2.09 to $70.49 bbl.

   Downstream, NYMEX RBOB futures for February delivery advanced $0.0297 to 
$1.9220 gallon, while ULSD futures bucked the trend, falling $0.0361 to $2.6300 
gallon.

   The U.S. dollar index softened by 0.209 points to 96.065 against a basket of 
foreign currencies.

   U.S. President Trump on Wednesday reissued threats of a military strike on 
Iran in a series of social media posts. On Thursday, Reuters reported that the 
president was weighing military options including strikes on the country's 
security forces and leaders to "inspire protesters".

   The resulting elevated risk premium to oil prices came not just because of 
concerns about Iran's oil supply. Iran could in response target production in 
neighboring countries and close the Strait of Hormuz, a chokepoint through 
which more than a fifth of global oil supply flows daily. Iranian officials 
have in the past days repeatedly warned of an "all-out war" in response to any 
U.S. attacks.

   The risk premium was kept in check by statements from Saudi Arabia and the 
United Arab Emirates. The region's top U.S. allies and opponents of the regime 
in Tehran said they would not allow their airspace or land to be used in a 
military attack against Iran. Axios on Thursday reported that Israeli and Saudi 
defense and intelligence officials are meeting with senior U.S. leaders in 
Washington.

   Oil prices were also lifted by a bullish U.S. government inventory report. 
Energy Information Administration data published Wednesday showed that 
commercial crude oil inventories fell by 2.3 million bbl last week, and 
distillate fuel oil stocks expanded by less than expected.

    




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