Oil Up 4% on Mideast Blockade, Caution of Iran Deal Drag


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Crude futures jumped as much as 4% Thursday (4/16), 
driving product prices up too, as a U.S. blockade on Iranian ports added to the 
squeeze on Middle East oil supplies, already impacted by the Strait of Hormuz 
shutdown.

   The bullish tone across energy markets was heightened by an assessment by 
Gulf and European officials that it could take up to six months to enforce a 
U.S.-Iran peace deal. U.S. President Donald Trump is counting on a quick 
resolution to the Iran war from a second of talks in Islamabad, due to be 
announced soon, between White House and Tehran negotiators. But Gulf and 
European officials have reportedly said achieving this might be difficult given 
U.S. demands that Iran completely abandon its nuclear program. The tit-for-tat 
in U.S.-Iran blockades of Middle East oil, which supply at least 20% of world 
needs, had also made energy a weapon both sides appeared willing to use, 
observers said.

   At Thursday's close, WTI crude for May delivery settled up $3.40, or 3.7%, 
at $94.69 bbl, while ICE Brent for June delivery finished up $4.46, or 4.7%, at 
$99.39 bbl.

   Among refined products, diesel proxy ULSD ended May futures trading on NYMEX 
closed up $0.0797 at $3.8329 gallon. On the gasoline front, NYMEX RBOB for May 
ended up $0.1089 at $3.1637 gallon.

   The across-the-board rally in energy came despite the U.S. Dollar Index 
strengthening by 0.164 points to 98.015 against a basket of foreign currencies.

   Crude futures remained elevated through the day, with WTI holding above $93 
bbl and Brent over $98 bbl, as markets balanced fresh ceasefire optimism 
against new logistical threats in the Middle East. President Trump announced 
that Israel and Lebanon have agreed to a 10-day ceasefire effective at 5 p.m. 
ET today, though underlying tensions remain high. While the president signaled 
a potential White House meeting between Israeli and Lebanese leaders, Israeli 
Prime Minister Benjamin Netanyahu maintains that the Israeli military will 
occupy a 10-kilometer security zone reaching the Syrian border. The fragile 
truce also faces opposition from Hezbollah, which asserted its right to resist 
the continued presence of Israeli troops on Lebanese soil.

   On the Iranian front, energy prices gained support from Tehran's plan to 
collect transit tolls for the Strait of Hormuz exclusively through domestic 
Iranian banks. This move effectively weaponizes the waterway by forcing 
shippers to bypass Western sanctions or face restricted passage, complicating 
the flow of 20 million bpd of petroleum liquids.

   U.S. energy industry executives have reportedly urged Trump to reject the 
Iran toll plans. Despite that, President Trump expressed confidence in a 
broader deal with Iran, claiming Tehran has agreed to return "nuclear dust" and 
commit to a 20-year non-nuclear pledge. Iran has reportedly agreed to only five 
years of non-nuclear enrichment.




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