The price of oil remained relatively stable on Monday morning in the U.S. following a military strike on Iran by the Trump administration. Despite initial expectations of a significant increase in oil prices, the actual rise was considered underwhelming compared to earlier predictions.
One notable observation from the trucking industry was the continued strength of diesel prices compared to crude oil and gasoline. Global crude benchmark Brent saw a 2.44% increase to $78.89/barrel, while West Texas Intermediate rose 2.52% to $75.70/b. RBOB gasoline also saw a 2.19% increase to $2.3806/gallon. However, ultra low sulfur diesel (ULSD) experienced the largest surge, jumping 3.67% to $2.6352/g.
Despite the initial uptick, oil prices later settled at or below Friday’s levels. ULSD saw a slight decline, while WTI and Brent remained relatively flat. News of oil tankers navigating through the Strait of Hormuz helped to ease market concerns.
Bob McNally, founder of Rapidan Energy Advisers LLC, noted that the market had already factored in potential disruptions due to the conflict between Iran and Israel. He suggested that if the conflict does not escalate further, oil prices could reverse.
The potential closure of the Strait of Hormuz, a critical oil shipping route, remains a key concern for the oil market. About 20% of global oil consumption passes through the strait daily. The decision to close the strait lies with Iran’s leadership, with Secretary of State Marco Rubio urging China to intervene due to its heavy reliance on oil shipments through the strait.
The widening gap between crude oil and diesel prices is a recent development. Factors such as supply disruptions in the Middle East and tight diesel inventories in Europe have contributed to the strength of diesel prices relative to crude.
Overall, the oil market continues to face uncertainty as geopolitical tensions persist. Keeping a close watch on developments in key oil-producing regions will be crucial in determining future price trends.
The original article was sourced from Reuters in 2023 and can be accessed for further information. This rewritten content is a summary of the key points discussed in the original article and offers insights into the current state of the oil market.
