US-Iran Tensions Drive Oil Prices Higher for Fourth Consecutive Session
Oil prices rose for a fourth consecutive session as tensions between the US and Iran continued to escalate. The Strait of Hormuz, through which a significant portion of global oil shipments pass, has seen reduced vessel traffic due to these tensions.
This has raised concerns over potential supply disruptions, supporting oil prices and adding to risk premiums. According to ING strategists Ewa Manthey and Warren Patterson, record-high diesel crack spreads have also tightened the market, contributing to higher prices.
US crude inventories fell by 328k barrels last week, exceeding market expectations of a 74k-barrel draw. Stocks at the WTI delivery hub in Cushing declined by 1.4m barrels, while product inventories were mixed, with gasoline stocks rising and distillate inventories falling.
US diesel crack spreads climbed above $100/bbl yesterday, reaching a record high due to global refining constraints and supply disruptions. Export restrictions from Russia have reduced diesel availability, while energy infrastructure disruptions elsewhere have added to concerns over supply and supported prices.