Brent Races to $115 as Drones Hit UAE Energy Hub, Hormuz


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Energy markets rallied anew Monday (5/4), driving 
crude futures up 6%, after an Iranian drone attack on a petroleum complex in 
the United Arab Emirates stoked new fires in the Middle East conflict.

   The strike on the VTTI Fujairah Terminals in UAE's eastern port city of 
Fujairah marked the first major escalation in almost a month in the conflict, 
after an April 8 ceasefire that halted U.S.-Israel bombing of Iran and Tehran's 
reciprocal strikes on its neighbors' oil facilities.

   Media images showed thick smoke billowing from the Fujairah plant, part of 
the global VTTI network owned by Dutch energy trader Vitol and Australia's IFM 
Investors.

   Media reports said a UAE oil tanker was also targeted by two drones while 
passing through the Strait of Hormuz, the waterway Iran has pledged to control 
in its bid to collect reparations for the war from vessels that prior to the 
war delivered a fifth of the world's energy needs.

   Separately, the U.S. navy exchanged fire with Iranian gunboats after U.S. 
President Donald Trump announced the United States will be creating a path for 
some 2,000 ships reportedly waiting to pass the Hormuz. In normal times, the 
waterway provides passage to 140 ships per day, carrying around 20 million bpd 
of petroleum liquids. Aside from Tehran's policing of the strait, the U.S. navy 
is blocking any ship from entering or leaving Iran's ports.

   The renewed U.S.-Iran escalation and tensions around the Hormuz drove NYMEX 
WTI crude for June delivery up $4.48, or 4%, to $106.42 bbl at the close.

   By 2:30 p.m. ET, global crude benchmark Brent was up $6.26, or 6%, to 
$114.43 barrel for the July contract on ICE Brent, reflecting the greater 
impact to oil supply outside of the U.S. Brent's session high was $115.30.

   Downstream, NYMEX ULSD futures for June delivery edged up by $0.1236 to 
$4.0700 gallon. NYMEX RBOB futures for June climbed $0.1436 to $3.7388 gallon.

   The U.S. Dollar Index advanced by 0.335 points to 98.4 against a basket of 
foreign currencies.




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