Oil Extends Surge After Drone Strike Fuels U.S.-Iran Tensions

James Thornhill

21 Jun 2019, 08:05 AM IST

(Bloomberg) -- Oil ramped higher after further attacks by Iran and its proxies on U.S. and Saudi assets in the Middle East prompted President Donald Trump to warn the Islamic Republic had made “a very big mistake.”

Front-month futures in New York were up 1.8%, after surging 5.4% on Thursday after Iran shot down an American drone just a week after two tankers were targeted in the region. Meanwhile, Iran-backed Houthi rebels in Yemen said they hit a Saudi Arabian power plant with a cruise missile, at least the third such attack on the kingdom’s infrastructure in a week.

Trump appeared to downplay the Iranian drone downing, saying a “loose and stupid” individual -- rather than Iran’s top leaders -- may have been culpable.

Oil Extends Surge After Drone Strike Fuels U.S.-Iran Tensions

Drivers
The Strait of Hormuz saw one-third of the world’s seaborne crude and fuels pass through its waters last year, the EIA said Thursday, highlighting the risk posed by escalating tensions between the U.S. and Iran Iraq’s oil ministry said it boosted security after a rocket exploded near an Exxon Mobil Corp. workers’ camp in the southern part of the country Russia’s contaminated oil crisis had an unexpected resurgence as Poland briefly halted crude imports via the Druzhba pipeline after detecting high levels of chemicals Brent is a “coiled spring” and may surge to $75 a barrel on improving fundamentals, rising Mideast tensions and financial positioning, Citigroup says Hedge funds boosted their bets by 46% that West Texas Intermediate crude will fall, the biggest increase since August, according to U.S. Commodity Futures Trading Commission data for the week ended June 11

Drivers

The Strait of Hormuz saw one-third of the world’s seaborne crude and fuels pass through its waters last year, the EIA said Thursday, highlighting the risk posed by escalating tensions between the U.S. and Iran
Iraq’s oil ministry said it boosted security after a rocket exploded near an Exxon Mobil Corp. workers’ camp in the southern part of the country
Russia’s contaminated oil crisis had an unexpected resurgence as Poland briefly halted crude imports via the Druzhba pipeline after detecting high levels of chemicals
Brent is a “coiled spring” and may surge to $75 a barrel on improving fundamentals, rising Mideast tensions and financial positioning, Citigroup says
Hedge funds boosted their bets by 46% that West Texas Intermediate crude will fall, the biggest increase since August, according to U.S. Commodity Futures Trading Commission data for the week ended June 11

Prices
West Texas Intermediate for August delivery rose 56 cents to $57.63 a barrel on the New York Mercantile Exchange as at 8:22 a.m. Sydney time The WTI July contract, which expired in New York Thursday, ended $2.89 higher to settle at $56.65, the biggest gain since Dec. 26. The August contract advanced 5.7% to close Thursday at $57.07 a barrel. Brent for August climbed $2.63 to end the session at $64.45 a barrel on London’s ICE Futures Europe Exchange. The global benchmark crude traded at a $7.38 premium to WTI for the same month.

Prices

West Texas Intermediate for August delivery rose 56 cents to $57.63 a barrel on the New York Mercantile Exchange as at 8:22 a.m. Sydney time
- The WTI July contract, which expired in New York Thursday, ended $2.89 higher to settle at $56.65, the biggest gain since Dec. 26. The August contract advanced 5.7% to close Thursday at $57.07 a barrel.
Brent for August climbed $2.63 to end the session at $64.45 a barrel on London’s ICE Futures Europe Exchange. The global benchmark crude traded at a $7.38 premium to WTI for the same month.

To contact the reporter on this story: James Thornhill in Sydney at jthornhill3@bloomberg.net

To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net, Keith Gosman