Crude oil prices were rising sharply at midmorning Friday, with contracts on track to end the week significantly higher.
U.S. crude prices were up 9.8% at about 11 a.m. ET while Brent crude prices were about 6.6% higher as markets reacted to a Wall Street Journal report that Kuwait has cut oil production amid the closure of the Strait of Hormuz. Prices are also being supported by remarks made by President Trump that have dimmed hopes of a quick resolution to attacks on Iran by the U.S. and Israel.
April prices for U.S. benchmark West Texas Immediate crude were up $8.05 to $89.06/bbl while May prices were $6.15 higher to $84.79/bbl. The front-month WTI contract has not finished a trading session above $90/bbl since late September 2023, OPIS data show.
May Brent crude was moving $5.69 higher to $91.05/bbl, with June prices up $4 to $85.04/bbl. Brent prices have not finished above $90/bbl since April 2024. WTI prices are on track to end the week about 32% higher, while Brent crude is likely to finish 25% higher than last week. While the week-to-week gains are impressive, it is worth remembering that prices last Friday also already reflected a risk premium as tensions between the U.S. and Iran had pushed prices off recent lows in weeks leading up to the start of fighting.
Refined product futures were also seeing gains, but the increases were largely muted compared to jumps seen earlier in the week.
The Nymex April ULSD contract was 1.75cts higher to $3.6318/gal while May prices were up 5cts to $3.2878/gal. ULSD futures are on track to end the week with gains of about 40%, as the closure of the Strait of Hormuz is expected to exacerbate an already tight global supply situation due to sanctions on Russian energy exports. Russia had been one of the world's largest exporters of diesel prior to the sanctions.
April RBOB futures were up 1.65cts to $2.6874/gal, while May prices were 3.27cts higher to $2.6483/gal. RBOB futures are up 17.5% for the week so far.
Iran's closure of the Strait of Hormuz due to the attacks has stalled tanker traffic in the area, leading to storage facilities in the Persian Gulf region to begin filling. The Journal reported Friday that Kuwait has started cutting production at some oil fields. Further production cuts could be coming, as the Journal reported that storage facilities in Saudi Arabia and the United Arab Emirates were also filling up.
While President Trump has said the U.S. Navy would escort tankers through the narrow waterway, it remains to be seen how that program would work and if it would restore traffic through the strait.
Markets had hoped for a quick resolution to the fighting, but on Friday Trump said the U.S. would not cease attacks on Iran until that country agreed to an unconditional surrender and the U.S. approved of its new leadership. Those conditions have dimmed hopes that fighting will soon stop. Shutting in production could lead to market disruptions even if the fighting does end, as it risks damaging wells and requires time to restart output.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
Reporting by Steve Cronin, scronin@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com
(END) Dow Jones Newswires
03-06-26 1227ET
