Brent Jumps After Hits on Iranian Energy Infrastructure


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Brent futures jumped more than 4% Wednesday (3/18) morning 
after Iran reported attacks on some of its energy infrastructure for the first 
time since the beginning of the latest Middle East conflict, and vowed 
retaliation.

   Near 09:05am ET, ICE Brent crude for May delivery jumped $4.29 to trade near 
$107.71 bbl. NMEX WTI crude for April delivery rose $1.45 to $97.66 bbl.

   Downstream, NYMEX ULSD futures for April delivery were up $0.1891, or 4.7%, 
to $4.2049 gallon, underscoring the continued surge in global diesel prices. On 
the gasoline front, the RBOB gasoline contract for April advanced $0.0932 to 
$3.2166 gallon.

   The US dollar index strengthened by 0.245 points to 99.575 against a basket 
of foreign currencies, slightly limiting the upside on the NYMEX complex.

   Energy prices, led by Brent, jumped broadly for the 11th time in 13 trading 
sessions since the February 27 start of U.S.-Israeli airstrikes against Iran 
and retaliation by Tehran, resulting in regional contagion.

   On Wednesday, Iran partially suspended operations at the South Pars gas 
field to contain fires. An oil processing plant and a refinery were also 
allegedly hit by missiles. Attacks on previously spared Iranian energy 
infrastructure would mark a further escalation of the conflict, which has 
already caused the largest oil supply disruption in history.

   Iran's government-affiliated Fars news agency cited a senior military 
official saying that Iran will in response target "enemy infrastructure 
previously thought to be safe." The country's state news agency subsequently 
published a list of energy facilities in the Gulf states, calling them "now 
legitimate targets."

   Supply disruptions largely persisted as tanker traffic through the Strait of 
Hormuz remained at a trickle and producers curbed output. Iraq, which was 
forced to throttle oil production to around a third of pre-war output, on 
Wednesday restarted pipeline flows to export terminals in Ceyhan, Turkey, 
aiming for an initial 100,000 bpd. Kurdish oil exports from the port have in 
the past averaged more than 400,00 bpd.

   The rise in WTI crude futures was moderated by an American Petroleum 
Institute report published late Tuesday showing an unexpectedly large build in 
commercial crude oil inventories in the U.S. Official government data from the 
Energy Information Administration is scheduled for release at 10:30am ET today.

   The American Petroleum Institute late on Tuesday (3/17) reported a third 
consecutive weekly build in commercial crude oil stocks for the week ended 
March 13, citing a 6.556 million bbl rise, after back-to-back growth of 5.6 
million bbl and 11.4 million bbl in prior weeks.

   The Federal Reserve's Open Market Committee is due to reveal at 2.00 p.m. ET 
its latest decision on U.S. interest rates after a two-day policymaking 
meeting. The Fed's last rate cut came in December, and current market 
expectations point to no change, keeping rates within the 3.5% and 3.75% range.

   On the data front, the U.S. Bureau of Labor Statistics reported earlier on 
Wednesday that the Producer Price Index for final demand advanced 0.7% in 
February, following a 0.5% increase in January and 0.4% in December.




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