Light, sweet crude oil for June delivery fell modestly to settle at $63.60/bbl on the New York market May 1 while the Brent contract for June held unchanged at just above $72/bbl in London.
Traders and analysts are watching world oil supply levels now that the US is ending sanctions waivers to some countries that had bought Iranian oil.
Under earlier international nuclear-related sanctions, Iran smuggled about 150,000-200,000 b/d to market, said Sara Vakhshouri, president of SVB Energy International in Washington, DC.
“Iran might be able to smuggle the same amount of oil under the current sanctions but going significantly beyond this is hard to imagine,” Vakhshouri said. “It is very hard to hide oil cargos on the sea.”
Even if middlemen unconcerned about violating US sanctions were to purchase the Iranian oil, no end user would want to process oil from Iran because of the risks involved with going against US sanctions, Vakhshouri said.
She noted Iran has some ongoing oil delivery agreements as part of certain debt payment to China and India. She said US officials might allow these oil deliveries because they are not sales. She estimates 100,000-150,000 b/d of debt payment deliveries to India.
Separately, Saudi Arabia has scheduled a technical meeting on May 19 in Jeddah to discuss with other producers how much oil should be produced to counterbalance the gap left by less Iranian oil on world markets.
Meanwhile, US State Department officials suggest Saudi Arabia and Kuwait resolve a dispute over jointly held Khafji oil field in the Partitioned Neutral Zone, an area with onshore and offshore fields north of the Persian Gulf.
Energy prices
The June contract for light, sweet crude oil on the New York Mercantile Exchange gained 31¢ to settle at $63.60/bbl on May 1. The price for July delivery was down 29¢ to settle at $63.69/bbl.
NYMEX natural gas for June rose 4.5¢ to $2.62/MMbtu.
Ultralow-sulfur diesel for June rose a rounded 2¢ to $2.09/gal. The NYMEX reformulated gasoline blendstock for June fell less than a penny to a rounded $2.06/gal.
Brent crude for June held unchanged at $72.04/bbl. The July price climbed 12¢ to settle at $72.18/bbl.
The gas oil contract for May increased $1 to $639/tonne on May 1. The average for OPEC’s basket of crudes was $72/bbl on May 1, up 9¢ from Apr. 30.
Contact Paula Dittrick at [email protected].
