Big Oil's big rethink
USO•Oil prices rebounded around 3% to above $107 a barrel after Donald Trump rejected an Iranian peace deal that would have reopened the Strait of Hormuz. The prolonged conflict is changing oil and gas majors' strategic calculations, while markets weigh the possibility of a US diesel export ban.
1. Oil prices rebound
Oil prices rose around 3% to above $107 a barrel on Monday after Trump rejected an Iranian peace deal that would have reopened the Strait of Hormuz. Oil flows through the waterway have grown steadily in recent weeks, even as the standoff remains largely stagnant.
2. Market pressures build
Elevated oil prices are stoking concerns about persistent global inflation and increasing expectations that central banks will raise interest rates. Government bond yields reached new multi-decade highs last week, amid hot US business activity data and concerns about government debt.
3. Diesel export debate
The Trump administration is considering whether to ban diesel exports as prices rose above $6.50 a gallon ahead of November's midterm elections. After talks with US refiners, officials appear to be seeking an alternative to a short-term ban; the possibility has widened the gap between US crude futures and Brent, signaling expectations that US refiners may process less crude if diesel output cannot be exported.
