The Brent crude oil price for July delivery declined modestly on May 11 but still settled above $77/bbl on the London market while the light, sweet crude oil price for June delivery also fell but still settled well above $70/bbl on the New York market.
Oil prices had risen earlier last week after US President Donald Trump announced plans to discontinue US participation in an international agreement that lifted sanctions in exchange for Iran agreeing to curb its nuclear program.
US economic sanctions are to be imposed on Iran. Meanwhile, the European Union is talking with Iran, encouraging Iran to maintain compliance with terms of the 2015 international agreement, said Sara Vakhshouri, president of SVB Energy International in Washington, DC.
“Refiners will usually have about 180 days to report import cuts from Iran,” she said. “This gives enough time for the Organization of Petroleum Exporting Countries to adjust its production and supply.”
Vakhshouri said SVB Energy expects Iran’s oil exports could be reduced 200,000-500,000 b/d by Dec. 31. Iran’s export cuts could reach 800,000-1 million b/d by about June 2019, she forecast.
OPEC released a report May 14 showing cartel crude oil production increased 12,000 b/d in April, month-on-month, to average 31.9 million b/d, which stemmed mainly from increased output by Saudi Arabia and Algeria.
Meanwhile, total world oil supply during April rose 120,000 b/d month-on-month to average 97.89 million b/d, almost all of which was driven by non-OPEC production.
Saudi Arabia Energy Minister Khalid al-Falih already said Saudi oil production could be increased to cover any supply loss from Iran. He also previously advocated for higher oil prices.
OPEC members are scheduled to meet in Vienna June 22. Cartel members and certain other major producers, including Russia, are expected to evaluate their production-cut targets of 1.8 million b/d since January 2017. The targets are set to expire Dec. 31.
In its Monthly Oil Market Report, OPEC raised its 2018 world oil demand forecast 25,000 b/d to increase by 1.65 million b/d and average 98.85 million b/d.
Energy prices
The June light, sweet crude contract on the New York Mercantile Exchange fell 66¢ on May 11 to settle at $70.70/bbl. The July price was down 63¢ to $70.68/bbl.
The NYMEX natural gas price for June fell less than a penny to settle at a rounded $2.80/MMbtu. The Henry Hub cash gas price was $2.75/MMbtu on May 11, up 2¢.
Ultralow-sulfur diesel for June decreased less than a penny to settle at a rounded $2.22/gal for a third consecutive trading session. The NYMEX reformulated gasoline blendstock for June edged down less than 1¢ to remain at a rounded $2.19/gal.
Brent crude oil for July fell 35¢ to settle at $77.12/bbl on London’s International Commodity Exchange. The August contract was down 30¢ to $76.94/bbl. The gas oil contract for June was $677.50/tonne, up $6.50.
OPEC’s basket of crudes was $74.42/bbl for May 11, down 4¢.
Contact Paula Dittrick at [email protected]
