Recap: The crude market rallied higher on Monday after the U.S. and Iran resumed their military strikes on Sunday. U.S. forces struck two launchers on Iran’s Larak Island in the Strait of Hormuz on Sunday, the first known American strikes on the country since late July. In response, Iran attacked two U.S. air bases in Jordan. The renewed military strikes in the Middle East and concerns of further oil supply disruptions lifted oil prices. The oil market gapped higher on the opening on Sunday evening from $83.87 to $84.69. The market partially backfilled the gap as it erased some of its gains and posted a low of $84.11. However, the market bounced off that level and rallied to a high of $86.79 in light of U.S. President Donald Trump stating that Iran’s Kharg Island was being attacked. The market later gave up some of its gains as Iran denied any attack on the island and said oil operations were continuing and Iran’s President stated that Iran was still open to a negotiated resolution to the conflict. The October WTI contract settled up $2.36 at $85.76 and the October Brent contract settled up $2.39 at $90.49. The product markets ended the session in mixed territory, with the September heating oil market contract going off the board up 13.86 cents at $4.4953 and the September RB contract going off the board down 5.29 cents at $3.4370.
Technical Analysis: The crude market will remain supported as efforts to negotiate an end to the conflict remain stalled amid the renewed military strikes. The oil market is seen finding resistance at $86.79, $87.51, $87.69 and $88.07. Meanwhile, support is seen at $84.11 to $83.78, $82.25, $80.65, $79.62, $78.67, $76.80, $75.35, $73.47 and $73.10.
Fundamental News: Shipping data showed that the number of visible commodity vessels transiting the Strait of Hormuz dropped to five per day over the weekend, as companies tread cautiously amid continued attacks on ships. The actual number of ships passing the strait could be higher as some vessels have switched off their automatic identification system to evade attacks.
The European Union said that it would continue to work with the United States and other G7 and international partners to keep up pressure on Iran, as it issued a statement to coincide with this week’s G20 meeting.
IIR Energy said U.S. oil refiners are expected to shut in about 27,000 bpd of capacity for the week ending September 4th, cutting available refining capacity by 3,000 bpd. Offline capacity is expected to increase to 230,000 bpd in the week ending September 11th.
The U.S. Environmental Protection Agency on Monday granted small refinery exemptions worth 1.76 billion renewable fuel credits for the 2025 compliance year and said it will propose reallocating the waived obligations to larger refiners in future years. The EPA also plans to shift the waived obligations to produce biofuels such as ethanol from corn or sugarcane and biodiesel from oils and fats onto larger refiners in future years. The EPA said it has granted full exemptions to 18 out of 34 refineries that had sought exemptions from their Renewable Fuel Standard obligations for the 2025 compliance year. The agency has delayed 2025 compliance until September 1st and is currently seeking another extension. The EPA statement said it granted 50% exemptions to 11 refineries, denied three petitions and determined two petitions to be ineligible.
Motiva Enterprises and Exxon Mobil Corp are preparing their east Texas refineries for high winds and possible flooding as a developing tropical storm nears the U.S. Gulf coast. Sources said Motiva and Exxon have not reduced production at their Port Arthur and Beaumont, Texas refineries, respectively, while securing loose items and equipment that can be blown by high winds or drift in flood waters should those be produced by the developing storm expected to make landfall on Tuesday.
Delek said its 73,000 bpd Big Spring, Texas refinery reported an equipment malfunction.
Early Market Call – as of 9:00 AM EDT
WTI – Oct $88.21, up $2.44
RBOB – Oct $3.1276, up 5.06 cents
HO – Oct $4.5564, up 14.64 cents
