Oil and diesel futures rebound as Trump says the U.S. doesn't need an Iran deal and Iran says two tankers hit mines

Oil prices rose again Thursday after President Trump wrote on social media, "We don't need a deal with Iran." Brent crude was up $1.14 at $93.90 a barrel and U.S. crude was up 70 cents at $87.23 at 7:31 a.m. Central on Nov. 12, Reuters reported. Prices had been flat to lower before the post, Reuters said.

The rebound began Wednesday, after hopes for a deal had pushed crude to two-month lows, DTN reported Nov. 11. Brent settled Nov. 11 at $92.76, up $1.27, and U.S. crude finished at $86.53, up 49 cents, Al Jazeera reported Nov. 12.

What changed since the selloff

The news behind the drop has turned the other way.

- Senior Iranian officials said they will not move any enriched uranium out of the country, DTN reported Nov. 11. That contradicted a reported Iranian proposal, presented at the White House by Qatari mediators on Monday, that had helped drive the selloff. Iran's security chief, Mohsen Rezaei, repeated the point in televised remarks, Reuters reported Nov. 12.
- Iran's Revolutionary Guards navy said Thursday that two oil supertankers were disabled by explosions after hitting naval mines, and that the ships had ignored warnings against an unauthorized route through the Strait of Hormuz, Reuters reported.
- Israel's security cabinet ordered the military to step up preparations for an attack on Iran, Israeli media reported Wednesday evening, according to Al Jazeera.

Supply is moving the other way. OPEC's monthly report, released Nov. 11, showed output up about 2 million barrels a day in October to its highest level since the war began, led by Saudi Arabia, Kuwait and Iraq, DTN reported. Reuters said Thursday that geopolitical risk was outweighing that added crude.

Wholesale diesel turned with crude. December ultra-low sulfur diesel futures on Nymex, the U.S. diesel benchmark, were up 12.7 cents at $4.2579 a gallon Wednesday morning, DTN reported Nov. 11.

What it means for carriers

The pump has not caught the turn. EIA's weekly survey, released Nov. 10, put the national average for on-highway diesel at $6.127 a gallon, about 17 cents lower than a week earlier but $2.29 above a year ago, FleetOwner reported Nov. 11. That survey came before this week's rebound in futures.

Retail prices follow wholesale prices with a lag, and surcharge tables tied to EIA's weekly average adjust after that. While diesel was falling, the lag helped carriers, because surcharges were still figured from higher weekly averages. When prices turn up, it works against them: the fuel bill rises first and the surcharge follows. Owner-operators quoting all-in spot rates carry the most risk, because the fuel share of an all-in rate is set when the load is booked.

What shippers and brokers should watch

- EIA's weekly petroleum inventory report, pushed to Thursday by the Veterans Day holiday, Reuters reported. Its distillate figures show how much diesel the country has in storage heading into winter.
- EIA's next weekly diesel average, the figure most surcharge tables are built on.
- Traffic through Hormuz. Iran's parliament speaker, Mohammad Bagher Ghalibaf, said the strait will never return to its prewar status, while U.S. Central Command says U.S. forces are keeping it open for commercial shipping, Al Jazeera reported Nov. 12.

Track the weekly average on PDI's diesel prices page.