USO Jumps To Over 11-Year High As Brent Tops $116, WTI Crosses $100 Amid Escalating Middle East Tensions

Brent crude futures reached a six-month high on Friday as attacks on Saudi Arabia and concerns over further Middle East escalation fueled fears of oil supply disruptions.

• Iran’s army chief Maj. Gen. Amir Hatami said the military is fully prepared for “asymmetric warfare,” amid speculation of renewed U.S. strikes.
• Citi cautioned the rebound in Strait of Hormuz shipments may not last, as stronger flows could reflect inventory drawdowns or released stockpiles.
• UBS warned further escalation could renew supply disruptions, with volatile flows and high freight rates leaving the market undersupplied.

The United States Oil Fund (USO) jumped to hit its highest level in more than 11 years as crude prices rallied amid escalating Middle East tensions and concerns over potential supply disruptions.

USO, which tracks movements in U.S. crude oil futures, touched $167.88, its highest level since May 2015, according to historical price data.

Brent crude futures maturing in December climbed 2.63% to $116.15 per barrel on Friday, hitting a six-month high, while U.S. West Texas Intermediate (WTI) crude futures for the same month gained 2.95% to $102.40 per barrel.

Saudi Attacks, Iran Tensions Raise Oil Supply Concerns

Oil prices extended their gains as Houthi attacks on Saudi Arabia intensified concerns over the security of energy infrastructure and shipments across the Middle East.

Saudi Aramco instructed employees to evacuate its Dhahran headquarters and work remotely on Thursday, Reuters reported, following attacks in the country's eastern oil-producing region.

Iran's army chief, Maj. Gen. Amir Hatami, said Thursday that the country's military was fully prepared for “asymmetric warfare,” according to state news agency Tasnim. The developments come amid speculation about renewed U.S. strikes on Iran. 

The comments come after President Donald Trump said Wednesday that Washington was not negotiating with Tehran and suggested further developments could follow soon. Brent futures were on track for a third consecutive weekly gain as traders assessed the potential for further escalation.

Citi Warns Gulf Oil Export Recovery May Be Temporary

Despite Brent crude rising more than 85% this year, Bloomberg reported that oil shipments through the Strait of Hormuz have recovered toward pre-war levels. 

Citigroup analysts, including Francesco Martoccia, cautioned that the recent improvement in shipments may not represent a sustained recovery, as stronger flows could reflect inventory drawdowns or the release of previously stockpiled oil.

UBS analyst Giovanni Staunovo told Reuters that further escalation could trigger renewed supply disruptions, with volatile oil flows and elevated freight rates leaving the market undersupplied.

What Retail Thinks About USO

On Stocktwits, retail investors’ sentiment around USO remained in the ‘bullish’ territory over the past day amid ‘high’ message volume levels.

So far this year, USO has rallied over 145%. Meanwhile, the ProShares Ultra Bloomberg Crude Oil (UCO), which seeks twice the daily performance of a WTI crude oil futures index, has surged nearly 242% over the same period.

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