Oil Soars After Trump Vows War Escalation, Brent-WTI Flips


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Oil and product prices rallied Thursday (4/2) morning after 
U.S. President Donald Trump said strikes on Iran will intensify over the next 
two to three weeks, and said the U.S. was not responsible for reopening the 
Strait of Hormuz.

   Steep backwardation in U.S. crude futures, which have rallied less intensely 
than Brent throughout the month-long war on the notion that U.S. supplies were 
more insulated, drove front-month West Texas Intermediate higher than the 
global benchmark for the first time since 2022.

   By 08:35 a.m. ET, NYMEX WTI futures for May delivery were up $10.25 to 
$110.37 bbl. The ICE Brent contract for June delivery rose $7.55 to $108.91 
bbl. It was the first such slip between the two benchmarks due to the extreme 
backwardation in their time structures, reflecting short-term supply concerns. 
May WTI front-month was about $15 bbl higher than June while June Brent was 
about $9.5 bbl above July.

   Among refined products, RBOB futures for May delivery advanced by $0.1993 to 
$3.2907 gallon. Front-month ULSD futures soared $0.5295 to $4.5863 gallon.

   The US dollar index strengthened by 0.512 points to 99.97 against a basket 
of foreign currencies.

   In a televised speech on Wednesday evening, Trump said that the U.S. is 
going to hit Iran "extremely hard over the next two to three weeks", adding 
that "we're going to bring them back to the Stone Ages." The president also 
reiterated threats to strike Iranian energy infrastructure. At the same time, 
he said the U.S. didn't "need" the Strait of Hormuz but may assist allies in 
reopening the waterway, the de facto closure of which has now for five weeks 
choked the world off a fifth of oil supply. He claimed the strait will "reopen 
naturally" after the end of the war, for which he presented no concrete plan 
nor timeline.

   The remarks fueled concerns over the current supply crisis deepening and 
curbed optimism over a ceasefire. The war has over the past few weeks escalated 
to more energy assets in the region, including oil and gas fields, refineries, 
terminals and tankers. The longer flows from the Persian Gulf remain at a 
standstill and the longer the war lasts, the higher the share of disrupted 
supply which may be permanently lost.

   Commercial crude oil inventories in the U.S., meanwhile, continued to 
expand. The Energy Information Administration on Wednesday reported a stock 
build of 5.5 million bbl in the week ending March 27, lifting them to 5% above 
year-ago levels. The EIA also reported U.S. product exports soaring to their 
highest on record.




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