US light, sweet crude oil and Brent crude oil prices both decreased May 18 to end a volatile trading week as analysts contemplated the effects upon world oil markets from planned US economic sanctions on Iran as well as on continuing oil production declines in Venezuela.
On May 17, Brent for July briefly surpassed $80/bbl on the London market, but it dropped before closing. The May 18 settlement for July was $78.51/bbl.
Crude oil prices had climbed after US President Donald Trump said he is stopping US participation in a 2015 international agreement to curb Iran’s nuclear program. Trump plans new US sanctions on Iran. The European Union is encouraging Iran to abide by the 2015 agreement.
The US withdrawal likely will not have any immediate effect on Iran’s oil exports. Unilateral sanctions by one nation is unlikely to be as effective as previous sanctions involving an international alliance.
During the weekend, Venezuela’s President Nicolas Maduro won reelection to a 6-year term amid claims of vote rigging. Opposition candidate Henri Falcon has called for new elections. Maduro’s victory could trigger stricter international sanctions, including new US measures.
“The specter of US oil sanctions on the embattled Latin American producer now looms large as Washington strives to tighten the financial noose,” Stephen Brennock, analyst at brokerage PVM Oil Associates Ltd., told the Wall Street Journal.
The International Energy Agency reports Venezuelan crude output fell 50,000 b/d month-on-month in April, to stand at 1.42 million b/d.
“Washington has already enforced economic measures that impair Venezuela’s ability to finance projects and pay back debt,” the IEA said, adding Venezuela’s oil production continues falling.
Energy prices
The June light, sweet crude contract on the New York Mercantile Exchange settled at $71.28/bbl on May 18, down 21¢ from May 17. The July price was down 20¢ to $71.37/bbl.
The NYMEX natural gas price for June decreased 1¢ to remain at a rounded $2.85/MMbtu. The Henry Hub cash gas price gained 4¢ to $2.76/MMbtu on May 18.
Ultralow-sulfur diesel for June fell 1.5¢ to settle at a rounded $2.26/gal. The NYMEX reformulated gasoline blendstock for June declined less than 1¢ to settle at a rounded $2.23/gal.
Brent crude oil for July decreased 79¢ to settle at $78.51/bbl on London’s International Commodity Exchange. The August contract was down 76¢ to $78.49/bbl. The gas oil contract for June was $697, down $7.25.
Contact Paula Dittrick at [email protected].
