CRUDE WRAP: WTI (M6) SETTLES USD 6.95 HIGHER AT USD 106.88/BBL; BRENT (N6) SETTLES USD 6.04 HIGHER AT 110.44/BBL
The crude complex was firmer as participants digested numerous Middle East headlines. Initially, traders digested a WSJ article which suggested that Trump told officials to prepare for an extended blockade on Iran, before crude benchmarks took another leg higher after a White House Official said Trump and oil companies discussed steps to continue the Iran blockade for months, if needed. The bullish news for oil did not stop there, as further source reports, via Press TV, suggested that Iran would hit the US with “unprecedented” military action, should the US continue its “maritime piracy”. WTI and Brent continued to edge higher and hit peaks of USD 107.68/bbl and 111.50/bbl, respectively, after N12 News reports. Firstly, CENTCOM has prepared a plan for a "short and powerful" wave of strikes against Iran aimed at trying to break the current impasse in negotiations, and secondly that Trump reject's Irans offer, and intends to keep the naval blockade in place until the regime agrees to a deal that addresses US concerns about its nuclear program. Following this, benchmarks came off peaks as Reuters source reports suggested OPEC+ is likely to agree oil output hike at Sunday meeting without UAE, and OPEC+ likely to hike quotas by 206k BPD minus the UAE share of 18k BPD. Note, there was little reaction to latest Fed confab.
The significant rally in crude prices today is largely driven by heightened geopolitical tensions involving Iran, particularly due to Trump's discussions on an extended blockade. These developments suggest potential supply disruptions, which could tighten the oil market further. The looming OPEC+ output hike is noteworthy, but the bullish sentiment from geopolitical risks may overshadow this supply-side consideration in the near term.