ING analysts Warren Patterson and Ewa Manthey note that Oil has extended its rally as renewed US-Iran tensions threaten the fragile ceasefire and disrupt flows through the Strait of Hormuz. ICE Brent has moved above $78/bbl, while Russia’s ban on diesel exports until end-July intensifies middle distillate supply concerns. ING highlights tighter US product inventories and expects stronger demand for US barrels.

Brent supported by supply disruptions

"ICE Brent settled 5.2% higher yesterday at a little over $78/bbl, with further upside expected today following additional US strikes against Iran in response to its earlier attacks on several vessels navigating the Strait of Hormuz."

"Key for the oil outlook is whether the US and Iran are able to quickly de-escalate this latest rise in tensions."

"The market will be watching whether these crossings rebound in the coming days — or whether rising tensions keep shipowners wary of navigating this critical energy choke point."

"Adding to supply concerns in the oil market, and specifically in middle distillates, Russia announced a ban on the export of diesel until the end of July."

"Stronger distillate exports helped pull inventories lower — and with Russia’s diesel ban in place, demand for US barrels is set to rise even further."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)