Oil prices jumped Thursday after a report that the U.S. is sending a third aircraft-carrier strike group and up to 10,000 more troops to the Middle East, fueling bets that Washington will resume strikes on Iran after November's midterms. The move compounds an already tight fuel market, with Chinese refiners pulling back exports and tankers still coming under attack near the Strait of Hormuz.
Oil prices jumped on Thursday after The Wall Street Journal reported the U.S. is sending a third aircraft-carrier strike group to the Middle East. Brent crude last traded about 4.4% higher at $102.35 a barrel, while WTI rose 2.7% to $92.89. Separately, Brent futures expiring in December climbed 4.9% to $102.83 a barrel and WTI futures for November advanced 3.4% to $93.43.
Carrier deployment raises odds of renewed Iran strikes
U.S. officials told the Journal that Marine Corps ships and up to 10,000 additional troops are being deployed to the region, expected to arrive by the end of November. President Donald Trump has told aides he expects to resume bombing Iran after the midterms, officials said. According to CNBC, Rapidan Energy CEO Scott Modell said on Monday: "The direction of travel is toward escalation."
Investing.com reported that the rally accelerated as European traders arrived at their desks Thursday, with analyst David Morrison of Trade Nation noting it could be linked to Ukrainian President Volodymyr Zelensky's statement that Ukraine had attacked another Russian oil facility.
Fuel supply tightens even as Gulf flows recover
Middle East crude flows have largely recovered, but the picture stays fragile. Middle East crude exports reached 16.328 million barrels a day in September, their highest level since the conflict began in February, though still about 3.2 million barrels a day below February levels. CNBC separately reported that at least three tankers came under attack this week trying to transit the Strait of Hormuz, according to maritime security agencies monitoring the region.
Fuel markets remain strained on a separate front. Ukrainian strikes on Russian refineries forced Moscow to ban diesel exports, and U.S. diesel prices remained elevated Thursday at $6.40 a gallon on average after hitting record highs last month. U.S. diesel prices reached a record $6.53 a gallon last week, with inventories at historically low levels. Trump has said he is weighing a U.S. diesel export ban, though he has appeared to back off the idea in recent public comments.
Adding to the squeeze, Chinese state oil major PetroChina canceled a handful of gasoline and jet fuel shipments planned for October, a possible sign Beijing is moving to protect domestic supply. On the supply side, U.S. crude inventories rose by 922,000 barrels last week, compared with a 700,000-barrel draw analysts expected, while gasoline stocks fell 1.7 million barrels and distillate stocks dropped 2.3 million barrels.
Diplomacy remains in play alongside the military buildup. Iran said Wednesday it had received a U.S. response to its latest ceasefire proposal, after Trump rejected an earlier plan tied to reopening the Strait of Hormuz in exchange for lifting the U.S. blockade on Iranian ports.
Sources: CNBC, Investing.com
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