Brent Back Above $90 on New Middle East Escalation


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Oil futures snapped a three-day plunge to propel Brent 
crude back into $90 bbl territory Wednesday (7/29) as renewed military 
exchanges between U.S., regional, and Iranian forces caused tensions to soar 
again across the Middle East.

   Prices of refined products tracked the rally in crude, boosted further by a 
large weekly draw in U.S. crude stockpiles reported by the Energy Information 
Administration (EIA).

   NYMEX WTI for September delivery climbed $5.20, or 6.6 %, to settle at 
$84.46 bbl. The U.S. crude benchmark fell a cumulative 11% in three prior 
sessions.

   ICE Brent for September delivery surged $6.65, or 7.9%, to close at $90.74 
bbl. Brent lost 13% between the close of Thursday (7/23) and Tuesday (7/28).

   Downstream, NYMEX ULSD futures for August delivery surged $0.2192 to settle 
at $4.3701 gallon, while front-month RBOB futures gained $0.0633 to close at 
$3.3978 gallon.

   The US dollar index edged lower by 0.021 points to 101.245 against a basket 
of foreign currencies.

   The market turn followed a series of military actions over the past 24 
hours. Iranian forces conducted a missile strike targeting a U.S. installation 
in Jordan and engaged commercial shipping in the Strait of Hormuz. In response, 
joint U.S. and Saudi forces launched targeted strikes against militia positions 
in Iraq following recent attacks on Saudi energy facilities.

   Diplomatic hurdles regarding key transit corridors also weighed on market 
sentiment. Tehran reasserted full administrative claims over the Strait of 
Hormuz, turning down an Omani proposal for shared oversight and insisting that 
inbound traffic pass through Iranian territorial waters. Tanker traffic through 
the chokepoint remained severely restricted, with daily transits holding in the 
low single digits.

   In contrast, vessel movements through the Bab-el-Mandeb Strait continued to 
recover following recent Houthi-related shipping diversions. Crude exports out 
of Saudi Arabia's Red Sea port of Yanbu have expanded sharply in recent months 
as volumes were redirected away from Persian Gulf export terminals.

   Underlying fundamental support persisted as official U.S. data highlighted 
further inventory tightening. According to the U.S. Energy Information 
Administration, commercial crude oil inventories dropped by 7.2 million bbl for 
the week ended July 24 to 404.5 million bbl, falling well past market 
expectations. Strategic Petroleum Reserve stocks also declined by 3.8 million 
bbl to a multi-decade low of 307.7 million bbl.




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