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ANS blasts skyward
Brent sprints past the Alaskan benchmark to close in the $80 range Steve Sutherlin Petroleum News
Alaska North Slope crude powered into the upper $70s March 3 as Iran stepped up strikes around the Middle East in retaliation for attacks on Iranian targets by the United States and Israel. ANS shot $2.99 higher on the day to close at $78.70 per barrel, West Texas Intermediate jumped $3.33 to close at $74.56 and Brent jumped $3.66 to close at $81.40.
Brent traded above $85 March 3, slipping in later trading after President Trump suggested the U.S. Navy could escort tankers through the Strait of Hormuz.
The war expanded March 4 after a U.S. strike sunk an Iranian warship off Sri Lanka, and U.S. Senate Republicans voted down a bipartisan resolution to stop the air war and require authorization from Congress to attack Iran.
WTI crude closed at $74.66, up 0.1%, while Brent futures closed flat at $81.40 a barrel -- off a daily high of $84.48.
March 4 closing prices were moderated by a surprise drawdown of U.S. crude inventories.
U.S. commercial crude oil inventories for the week ended Feb. 27 leapt 3.5 million barrels from the previous week to 439.3 million barrels -- 3% below the five-year average for the time of year, according to data released March 4 by the U.S. Energy Information Administration.
Inventories were estimated to have risen by 1.6 million barrels, according to a Wall Street Journal analyst survey.
Total motor gasoline inventories decreased by 1.7 million barrels over the week to 253.1 million barrels -- 4% above the five-year average for the season. the EIA said. Distillate fuel inventories increased by 0.4 million barrels to 120.8 million barrels -- 3% below the five-year average for the time of year.
Analysts in the WSJ poll on the average expected a 1-million-barrel drawdown of gasoline inventories, while distillate inventories were forecast to have fallen by 2.8 million barrels.
Futures boosted in March 5 Asia trade Crude futures shot higher March 5 in Asia trade after a U.S. strike sunk an Iranian warship off Sri Lanka. As Petroleum News went to press, WTI and Brent were each up more than 3%.
Iraq, the number two producer in the Organization of the Petroleum Exporting Countries, cut output by some 1.5 million barrels a day for lack of storage and an export route, officials told Reuters. Qatar declared force majeure on gas exports; sources said a return to normal production volumes may take at least a month.
Shipping via the Strait was at a near-halt for the fifth day since hostilities arose, J.P. Morgan said in a client note, adding that some 329 oil vessels are stuck in the Gulf.
Iran has refrained from targeting most critical energy infrastructure while keeping shipping risk extremely elevated, the bank said, adding, "Storage capacity in the Gulf Cooperation Council countries -- Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Oman and Bahrain -- and prevailing energy prices are limiting factors on the length of the U.S. campaign."
Most of the oil fields can restart within days, with full capacity typically restored within two to three weeks, the bank said.
Leading into March 3, a pair of outsized trading days following the outbreak of hostilities in the Mideast took crude to a new level.
The largest beats hit on March 2, seeing ANS leap $2.96 to close at $75.71, while WTI surged $4.21 to close at $71.23 and Brent rocketed $5.26 to close at $77.74.
ANS jumped $1.94 Feb. 27 to close at $72.75, as WTI jumped $1.81 to close at $67.02 and Brent jumped $1.73 to close at $72.48.
On Feb. 26, ANS edged 9 cents lower to close at $70.81, WTI lost 21 cents to close at $65.21 and Brent shed 10 cents to close at $70.75.
ANS fell 13 cents Feb. 25 to close at $70.90, while WTI fell 21 cents to close at $65.42 and Brent edged 8 cents downward to close at $70.85.
ANS leapt $7.66 over the trading week from its close of $71.04 Feb. 24 to $78.70 on March 3. Brent surged $10.63 over the week and WTI leapt $8.93.
ANS closed at a $4.14 premium over WTI March 3, while Brent closed at a $2.70 premium over ANS.
$100 Brent? If volumes of oil from the Strait of Hormuz remain flat for five more weeks, Brent crude would likely extend to $100 a barrel, analysts at Goldman Sachs led by Daan Struyven, co-head of global commodities research said, MarketWatch reported.
"Price increases may be even more non-linear in the length of the disruption than our estimates suggest because longer disruptions may increase the time required between the restart and full ramp-up of production," they said.
Bob McNally president of Rapidan Energy Group said there is a mismatch between risk and oil prices, and the market is too complacent, Axios reported March 3.
He said years of geopolitical crises didn't bring large-scale disruptions to oil supply -- including U.S. bombing of Iranian nuclear sites last summer, and Russia's invasion of Ukraine.
There is a "boy who cried wolf effect," McNally said.
Brent soared to over $120 per barrel within weeks of the 2022 Russian invasion of Ukraine, he said, adding that Russia's oil exports were roughly a fifth of what moves through Hormuz, yet the current price rise is muted.
"We've just seen, over and over again, where you have these geopolitical events that momentarily put a spike in crude," he said. "They threaten some supply reduction, but no supply reduction actually happens, and the spike reverses."
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