On Thursday, April WTI crude oil prices closed at $80.70 per barrel, up 8.51%, marking a 19.5-month high, while April RBOB gasoline surged 6.20% to $2.68 per gallon. The spike in prices coincides with the ongoing conflict in the Middle East and the closure of the Strait of Hormuz, a crucial passage for energy shipments, which has halted exports from the Persian Gulf.
Iran’s Islamic Revolutionary Guard Corps has warned that vessels in the Strait of Hormuz are at risk from missile attacks, spurring Gulf producers, particularly Iraq and Saudi Arabia, to cut crude output. Goldman Sachs estimates a risk premium for crude oil at $18 per barrel due to the six-week halt in tanker traffic. Furthermore, OPEC+ plans to increase crude output by 206,000 barrels per day in April to restore production cuts made in early 2024.
The U.S. Energy Information Administration reported that U.S. crude inventories as of February 27 were 2.7% below the seasonal five-year average, while domestic crude production remained stable at approximately 13.696 million barrels per day. The Baker Hughes report indicated a slight decline in active U.S. oil rigs, which now total 409, just above recent lows.
