Crude oil and refined product futures prices were rising Monday, with gains accelerating during the morning as markets reacted to the renewal of fighting between the U.S. and Iran.

U.S. crude prices were up by about 1.8% at 11 a.m. ET, with the August West Texas Intermediate crude contract ahead by $1.10 to $70.33/bbl, about 60cts off the day's high. September WTI was up by $1.04 to $69.97/bbl.

Brent crude gains were more muted, with the lightly traded August contract rising by 74cts to $72.73/bbl as it heads toward expiration at the end of the month. The more-active September contract was 93cts higher to $73.63/bbl. Brent prices are about 40cts off the session's high so far.

Most activity in refined product futures was also focused on the next-month contracts ULSD futures were seeing gains of about 2.6%, with the July ULSD contract trading 8.46cts higher to $3.2928/gal while the more-active August contract was climbing by 8cts to $3.1822/gal.

RBOB futures were also trading about 2.6% higher, with July prices rising by 7.76cts to $3.0347/gal in light trade and August RBOB advancing by 7.02cts to $2.8961/gal.

The gains come as market reaction has been relatively muted despite the escalation of hostilities in the Persian Gulf that is once again disrupting tanker traffic through the Strait of Hormuz.

Despite exchanging rounds of tit-for-tat strikes over the weekend, it appears negotiations between the two countries will continue, with President Trump saying Monday representatives will meet for talks in Qatar on Tuesday.

In an analysis Monday, Neil Crosby of Sparta Commodities said markets are currently dealing with a surge of crude coming out of the Arabian Gulf in the wake of the signing of a memorandum of understanding between the U.S. and Iran that called for reopening the strait. The influx of those barrels, along with continued low buying by the Chinese, is pressuring markets.

"It seems obvious to us that the market is trying to clear a temporary spike in prompt (Arabian Gulf) crude that was trapped in the Strait," Crosby wrote.

The rise in refined product prices comes as the U.S. heads into the long Fourth of July holiday weekend, normally the high point for summer fuel demand. AAA is forecasting 61.4 million Americans will travel by car over the holiday, a small increase from last year. Retail gasoline prices heading into the weekend are averaging about $3.85/gal nationally, about 70cts/gal lower than this time last year.

A heat wave expected to impact much of the Southeast in coming days could impact fuel supply if the heat disrupts refinery operations along the Gulf Coast.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

  • Reporting by Steve Cronin, scronin@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com