Brent Crude futures (LCO) rebounded on Tuesday after slumping nearly 10% on Monday, dragged lower by U.S. President Donald Trump backtracking on his 48-hour ultimatum to reopen the Strait of Hormuz.
Iran dismissed Trump’s claim of “very good and productive conversations” between the nations as fake news and vowed to retaliate any potential attack on its vital infrastructure, Iranian Foreign Ministry Spokesman Esmail Baqaei said, according to a report from semi-official state news agency Fars News.
Supply Risks Pile Up: Even as the Iran War entered its 25th day, a large explosion at an oil refinery near the Texas coast on Monday provided additional support to oil prices. In an emergency alert, the Port Arthur City government issued an immediate “shelter-in-place” order for a few areas in the wake of the recent explosion at the Valero Refinery.
In a Facebook live stream from the impacted plant, City Mayor Charlotte Moses said no one was injured in the explosion. Port Arthur is located 145 kilometers east of Houston.
Refinery operator Valero is a publicly listed company and information available on its website shows the refinery employs 770 employees and processes 435,000 barrels of oil per day and converts them into gasoline, diesel and jet fuel.
No Let Up in Crude Rally: Energy commodities were higher across the board on Tuesday:
- The LCO Brent Crude futures contract climbed 2% to sub-$98 levels.
- The West Texas Intermediate (WTI) contract rose over 2% to $90+.
- The natural gas futures contract (NG) moved up nearly a percent to $2.91 per Million British thermal units (MMBtu).
Among refined products:
- The NYMEX-traded RBOB Gasoline futures (XB) rose 2.80% to $305.85 per gallon.
- Heating oil futures (HO) rallied nearly 4% to $421.30 per gallon.
WTI Crude Futures YTD Chart
Source: TradingView
In its commodities update, Danish investment bank Saxo said, “With global energy markets tightening at a record pace amid the continued disruption to flows through the Iran-controlled Strait of Hormuz, caution has returned.”
“Israel’s ongoing attacks, combined with reports that Saudi Arabia and the United Arab Emirates may join the conflict, point to a risk of further escalation.”
The biggest risk, according to the firm, lies in refined products, especially diesel and jet fuel.
