August WTI crude oil (CLQ26) today is down -0.33 (-0.40%), and August RBOB gasoline (RBQ26) is down -0.0158 (-0.47%).
Crude oil and gasoline prices gave up overnight gains and turned lower after Reuters reported that mediators had proposed a 10-day ceasefire between the US and Iran. Prices initially moved higher today, with crude posting a 5-week high and gasoline posting a 2-month high after hostilities between the US and Iran escalated further over the weekend.
Nat-Gas Prices Weaken on Tropical Storm Risk
Crude Prices Gain on Escalation of US-Iran Hostilities
Markets move fast. Keep up by reading our FREE midday Barchart Brief newsletter for exclusive charts, analysis, and headlines.
The US conducted a ninth straight day of airstrikes on Iran today, bombing military targets and communications networks, and Iran retaliated by launching drones and missiles at US bases in Kuwait, Jordan, Bahrain, and Iraq. The New York Times reported that the US is sending more warplanes to the Middle East, including F-35 and F-16 fighter jets, a possible sign that US military operations could expand in the coming days.
Also, signs that the conflict in the Middle East is widening are supporting crude oil after Houthi rebels said today that they will impose a maritime blockade on Saudi Arabia in retaliation for what they say is the kingdom's siege on the Yemeni capital, a potential threat to Saudi Arabian crude exports through the Red Sea.
However, crude prices erased their gains and turned lower today after Iran said it wouldn't abandon diplomacy and that Qatar and Pakistan had reached out to mediate an end to the conflict and proposed a 10-day cessation of strikes between the US and Iran.
Global crude oil supplies are tightening due to reduced flows through the Strait of Hormuz. The International Maritime Organization warned last Wednesday that it's too dangerous to cross the Strait of Hormuz at the moment, and visible transit through the strait has fallen sharply as Iran continues targeting tankers attempting to transit it.
Crude oil and products also have support from strength in the crude crack spread. The crack spread rose to a record high last Friday, potentially persuading refiners to boost their crude oil purchases and refine it into gasoline and distillates.
Crude prices also have support as Ukraine intensifies drone attacks on Russian oil infrastructure. Russian crude production fell to 8.928 million bpd in June, the lowest in 2.5 years, according to monthly OPEC data. According to EA Analytics, Russian crude-processing rates averaged 3.91 million bpd in the first 10 days of July, the lowest in 21 years, amid damage to Russian energy infrastructure caused by drone and missile attacks from Ukraine. According to Bloomberg, Ukrainian forces have attacked Russian fuel-producing facilities more than 50 times this year, hitting at least 24 of Russia's 34 largest refineries. As of the end of June, around 90% of Russian regions have imposed some form of fuel rationing or reported supply issues, as refining capacity has plunged following damage to facilities. The strikes have deepened a nationwide gasoline shortage, with several major refineries shut down and the government banning almost all gasoline, jet fuel and diesel exports. Russia is the world's number two diesel exporter, after the US, according to Vortexa.
Source: Yahoo Finance Top News — This article was automatically imported from the source. Read full article at original source →
