Key Takeaways
- Brent crude pushed toward $96 a barrel and WTI traded above $91 as Iran and the United States traded missile strikes, according to OilPrice.com.
- U.S. diesel prices hit a record high, a trend flagged in Investing.com's "The Energy Report: Diesel Hits Record High," with the national average reaching $5.85 a gallon.
- Citadel is shopping for U.S. oil production assets after previously bidding on WildFire Energy before Magnolia Oil & Gas won that auction for $4.06 billion, OilPrice.com reported.
- Venezuelan oil production could reach 2 million barrels per day within five years as investment accelerates, according to Oil & Gas 360's coverage of a World Oil/Bloomberg report.
- A&S Resources secured $6 billion in railway financing to unlock a $2.5 trillion iron ore asset in the Central African Republic, while MINING.COM reported China's Baowu is weighing a stake in BHP's Jimblebar mine.
Oil & Gas Markets
Crude prices extended their climb through the week as fighting between the United States and Iran resumed. OilPrice.com's Irina Slav reported that Brent crude was trading at $95.55 per barrel, and West Texas Intermediate was changing hands for $91.53 per barrel, as Iran and the United States traded missile strikes this week and Israel's defense minister threatened "crippling" Iran's infrastructure, both military and civilian, including energy facilities. Analysts at ANZ, cited in the same report, said "the market is entering a delicate adaptation phase. Elevated inventories helped absorb the initial supply crisis, but the challenge is now to keep the market balanced as those buffers diminish." Shipping through the key chokepoint remained thin: Oil & Gas 360's BOE Report coverage noted that only four commodity vessels transited the Strait of Hormuz on Thursday, down from nine, keeping traffic below its 10-day average.
The fuel market showed even sharper stress than crude itself. Investing.com's "The Energy Report: Diesel Hits Record High" flagged the surge, and related reporting confirmed the scale of the move: truckers in the U.S. are paying an average of $5.85 a gallon nationwide, a nearly 60% increase over the same period last year, with California diesel costing $7.70 per gallon, almost $2 a gallon more than the national average. As Again Capital's John Kilduff put it, "you can do all the virtual shopping you want, it's all going to come to your house on a truck that ran on diesel fuel so there's no way around it." Investing.com's companion piece, "Diesel Surge Raises Fresh Inflation Risks for the US Economy," underscored that the fuel's steady climb threatens to complicate the Federal Reserve's inflation fight just as policymakers weigh their next move.
Elsewhere, two major non-OPEC producers pointed to long-term supply growth even amid the volatility. Oil & Gas 360's coverage of a World Oil/Bloomberg report on Venezuela noted that Jefferies Financial Group estimates Venezuelan production could potentially reach 2 MMbpd within five years if the agreement holds and President Trump's call for $100 billion of oil investment comes to fruition, with Chevron announcing plans to invest more than $7 billion over the next five years through its Venezuelan joint ventures to more than double production to approximately 600,000 bpd. Separately, Guyana's oil minister said in World Oil reporting picked up by Oil & Gas 360 that Guyana's production has climbed above 900,000 bpd and is on track to approach 1.7 MMbpd by the end of the decade, up from approximately 80,000 bpd in 2020, making the country one of the world's fastest-growing oil producers. On the demand side for physical barrels, OilPrice.com reported that Citadel is shopping for U.S. oil production assets, including a previous bid for WildFire Energy before Magnolia Oil & Gas agreed to buy the Eagle Ford producer for $4.06 billion, with Reuters reporting the hedge fund has held talks with several private-equity owners of oil-weighted exploration and production companies in recent weeks. Drilling activity, meanwhile, held roughly steady: Investing.com's Baker Hughes coverage showed the total number of active oil and gas rigs in the United States remained at 588 for the week, marking the second straight week without change, with oil rigs increasing by 2 to reach 449 while gas rigs decreased by 2 to 130. On the policy front, Natural Gas Intel reported that Labor Day storms were set to ease Southeast air-conditioning demand and relieve pipeline operational flow order restrictions, while OilPrice.com reported that Ukraine's sanctions commissioner is pressing Congress to advance the Lindsey O. Graham Sanctioning Russia and Iran Act before the House's pre-election recess, noting the legislation passed the Senate on August 7 by an overwhelming 86-11 vote, reflecting rare bipartisan agreement. The Bureau of Land Management also advanced two domestic supply initiatives this week, proposing a revised land-use plan to expand energy development around Carlsbad, New Mexico, and opening a 60-day comment period on a proposal to streamline oil and gas permitting in Alaska's National Petroleum Reserve.
