MARKET WATCH: Oil prices climb on US plans to sanction Iran
Light, sweet crude prices jumped more than $2/bbl on the New York market May 9 with both the contracts for June and July delivery settling above $71/bbl. Brent crude prices also climbed more than $2 bbl on the London market with the contract for July settling above $77/bbl.
Prices continued to climb during early May 10 trading in New York. Meanwhile in London, Brent reached above $78/bbl during the trading session. It was Brent’s highest level since November 2014.
Analysts attributed the price gains to uncertainty about how remained how a US decision to renew sanctions against Iran will curb Iran’s oil exports.
US President Donald Trump announced a withdrawal from the 2015 international deal, which lifted sanctions against Iran in return for curbs to its nuclear program.
Saudi Arabia, which has the largest amount of spare production capacity among the Organization of Petroleum Exporting Countries, already said it will help stabilize the oil market by mitigating any potential supply shortages caused by new sanctions.
Analysts said this raises questions about the future of the production-cut targets by OPEC and other producers, including Russia. Those targets are scheduled to expire Dec. 31, 2018.
“Before we had Saudi Arabia deciding on its own oil policy, whereas now I think the US is influencing it,” said Olivier Jakob with Petromatrix, adding that this could complicate the coordination between OPEC members.
Separately, the US Energy Information Administration reported US crude oil inventories, excluding the Strategic Petroleum Reserve, decreased 2.2 million bbl for the week ended May 4 to a total estimated 433.8 million bbl (OGJ Online, May 9, 2018).
The Weekly Petroleum Status Report said US oil production across the Lower 48 gained 91,000 b/d to 10.2 million b/d while Alaska’s production fell for the week ended May 4. Total US oil production for the week of May 4 was 10.7 million b/d, up 84,000 b/d from the previous week.
Energy prices
The June light, sweet crude contract on the New York Mercantile Exchange soared $2.08 on May 9 to settle at $71.14/bbl. The July price was up $2.08 to $71.05/bbl.
The NYMEX natural gas price for June gained less than 1¢ to settle at a rounded $2.74/MMbtu. The Henry Hub cash gas price held at $2.72/MMbtu on May 9, unchanged from the previous day.
Ultralow-sulfur diesel for June increased 6¢ to settle at a rounded $2.22/gal. The NYMEX reformulated gasoline blendstock for June increased 5¢ to a rounded $2.17/gal.
Brent crude oil for July jumped $2.36 to settle at $77.21/bbl on London’s International Commodity Exchange. The August contract was up $2.36 to $76.93/bbl. The gas oil contract for June was $674.25/tonne.
The Organization of Petroleum Exporting Countries’ basket of crudes was unavailable for May 9.
Contact Paula Dittrick at [email protected]
About the Author
Paula Dittrick
Senior Staff Writer
Paula Dittrick has covered oil and gas from Houston for more than 20 years. Starting in May 2007, she developed a health, safety, and environment beat for Oil & Gas Journal. Dittrick is familiar with the industry’s financial aspects. She also monitors issues associated with carbon sequestration and renewable energy.
Dittrick joined OGJ in February 2001. Previously, she worked for Dow Jones and United Press International. She began writing about oil and gas as UPI’s West Texas bureau chief during the 1980s. She earned a Bachelor’s of Science degree in journalism from the University of Nebraska in 1974.