Oil Tops $91, US Diesel Crack Near $100 As US-Iran Strikes Resume, Tehran Claims Supertanker Mined In Hormuz

Brent crude futures climbed back above $90 a barrel, while West Texas Intermediate topped $86 after the US and Iran exchanged strikes for the first time in about a month. Tehran also claimed that an unidentified supertanker was struck by naval mines in the Strait of Hormuz.

Meanwhile, diesel crack spreads are approaching $100 a barrel again, suggesting an increasingly severe shortage across refined-product markets as the summer draws to a close. 

US Central Command said American forces struck Iranian rocket launchers that were preparing to deploy anti-ship mines in the critical waterway. The US has touted the Oman shipping corridor as open for business and moving crude and other energy products. Tehran’s inability to halt tankers passing through that part of the strait may suggest that its offensive capabilities have been degraded.

Iran’s Islamic Revolutionary Guard Corps said it retaliated by targeting US air bases in Jordan, while the United Arab Emirates intercepted an Iranian drone over its territorial waters.

“Brent crude is firmer at $90.48/bbl, up 2.5%, as tensions around the Strait of Hormuz support the geopolitical risk premium,” UBS analyst Dharmesh Gangaram wrote in a note.

Gangaram continued, “Overall, the desk sees a cautious, risk-off start to the session. Geopolitical developments and lower European liquidity are likely to remain the key drivers, with particular attention on the resources complex amid broad-based weakness in precious metals.”

Despite the overnight tit-for-tat attacks, an estimated 6 million to 8 million barrels per day of crude, primarily from US-allied Gulf producers, continues to move through Hormuz.

We previewed this in a note last week titled:

• “Dark” Tanker Fleet Shatters Iran’s Hormuz Stranglehold As Gulf Oil Exports Top Two-Thirds Of Pre-War Level

“The key is to watch the barrels, and as long as they continue to flow through the Strait of Hormuz, the buying appetite in the market remains muted for fear of being caught out,” Ole Hansen, head of commodity strategy at Saxo Bank, wrote in a note.

Last week, the top US commander for the Middle East said American forces had cleared Iranian mines from the Hormuz waterway, declaring the shipping lanes open.

With its missile batteries, drone launchers, naval units, surveillance networks, or command infrastructure degraded, Iran appears to be shifting from conventional sea denial toward a lower-cost asymmetric strategy.