USO, USO Gain Premarket As Brent Crude Hits 5-Month High — Middle East Shipping Attacks Fuel Supply Fears

• Yemen's Houthis claimed attacks on Saudi energy facilities, while ship-tracking firm Kpler said at least 18 vessels were attacked over two weeks.
• Brent crude has climbed approximately 80% this year as attacks on energy infrastructure disrupted global oil supplies.
• Traders are assessing President Donald Trump's decision to waive certain sanctions on Russia.

The United States Oil Fund (USO) and the ProShares Ultra Bloomberg Crude Oil (UCO) gained in Tuesday's premarket as crude oil prices advanced amid renewed attacks on Middle East energy infrastructure and reports of vessels being targeted in the Gulf, raising concerns about further supply disruptions.

The fund, which tracks West Texas Intermediate (WTI) crude futures, gained as WTI futures maturing in November climbed 4.3% to $108.17. Meanwhile, Brent futures maturing in December jumped around 2% to touch a five-month high of $111.05 per barrel.

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Brent crude has climbed approximately 80% this year, according to Bloomberg, as the Middle East conflict and Russia-Ukraine strikes on energy infrastructure have disrupted global oil supplies.

As of this writing, USO and UCO were trading more than 2% higher in the premarket session.

Fresh Attacks Keep Oil Supply Risks Elevated

Yemen's Iran-aligned Houthis said Monday they launched attacks on Saudi energy, airport and military targets, including an Aramco facility in Yanbu and the Shaybah oilfield. Saudi authorities had not immediately confirmed the claims.

Ship-tracking firm Kpler said at least 18 vessels were reportedly attacked over two weeks, adding to concerns about the security of oil shipments through the region.

ING analysts said oil prices continued to reflect a significant geopolitical risk premium, according to Reuters. They added that the premium could gradually diminish if crude shipments continued without disruption, although there were no indications of that happening yet

Gulf Oil Flows Recover As Traders Weigh Supply Outlook

Despite renewed tensions, U.S. Energy Secretary Chris Wright told Fox News that Persian Gulf crude flows had recovered to approximately 80% of prewar levels, Bloomberg reported, adding that refined-product shipments, however, remained constrained.

Capital Economics commodities economist Hamad Hussain warned that escalating attacks on ships could trigger a “renewed fall in oil supply and a continued rise in prices”. 

Meanwhile, Iran's First Vice President Mohammad Reza Aref said Tehran could ensure safe passage through the Strait of Hormuz for friendly nations but warned that the U.S. “must pay the price” for the current situation.

Traders are also assessing President Donald Trump's decision to waive certain sanctions on Russia, a move that could ease energy supply pressures.

What Retail Thinks of USO, UCO

On Stocktwits, retail sentiment around USO remained ‘neutral’. Meanwhile, sentiment around UCO remained in the ‘bullish’ territory.

So far this year, USO has surged over 120%, more than doubling. Meanwhile, UCO has gained around 231% over the same period.

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