MARKET WATCH: NYMEX oil price reaches $70/bbl

May 7, 2018
The light, sweet crude oil price for June delivery on the New York market reached $70/bbl in early May 7 trading after having settled at $69.72/bbl on May 4, which analysts largely attributed to uncertainty about US foreign policy toward Iran, including possible new sanctions.

The light, sweet crude oil price for June delivery on the New York market reached $70/bbl in early May 7 trading after having settled at $69.72/bbl on May 4, which analysts largely attributed to uncertainty about US foreign policy toward Iran, including possible new sanctions.

US President Donald Trump repeatedly has suggested withdrawal from a 2015 international agreement with Iran that lifted sanctions. A decision is expected by May. 12.

Previously, international sanctions cut Iranian exports by around 1 million b/d. Dubai-based Ehsan Khoman, head of research for the Middle East and North Africa region at MUFG Bank, told the Wall Street Journal that the bank expects US officials will “go it alone” if they impose sanctions, meaning Iran’s exports could drop by 250,000-350,000 b/d.

Iran’s Deputy Oil Minister Amir Hossein Zamaminia told Bloomberg that he believes a “suitable price” for oil is $60-65/bbl. Tensions are building between Iran and Saudi Arabia, whose oil officials have said they would like to see $80/bbl oil prices.

Brent crude oil prices in London rose above $75/bbl in April, marking that benchmark’s highest level in more than 3 years.

The Independent Energy Security Agency (IESA) recently said it expects Brent crude prices will trade in the $55-73/bbl range during 2018-20.

Moty Kuperberg directs the IESA. He also is with Dynamic Shipping Services (DSS) of Haifa, Israel. DSS provides international cargo shipping services.

“The world and mainly the New York Mercantile Exchange adopted a certain routine that when the world enters into some geopolitical tension—oil price rise,” Kuperberg said. “There is no real reason for any price rise—certainly not over $75 and even not $70/bbl for Brent.

“There is enough oil…the oil industry must show it is strong and mature. Yes, we can do without Iran just as we can do without Venezuela,” Kuperberg said of world oil supply levels.

Energy prices

The June light, sweet crude contract on the NYMEX jumped $1.29 on May 4 to settle at $69.72/bbl. The July price was up $1.32 to $69.58/bbl.

The NYMEX natural gas price for June fell 1.5¢ to settle at $2.71/MMbtu. The Henry Hub cash gas price was $2.69/MMbtu on May 4, unchanged from May 3.

Ultralow-sulfur diesel for June climbed 4¢ to settle at $2.15/gal. The NYMEX reformulated gasoline blendstock for June gained 2.6¢ to a rounded $2.11/gal.

Brent crude oil for July climbed $1.25 to settle at $74.87/bbl on London’s International Commodity Exchange. The August contract was up $1.30 to $74.52/bbl. The gas oil contract for May gained $8.50 to $651.50/tonne.

The Organization of Petroleum Exporting Countries’ basket of crudes averaged $70.99/bbl on May 4, down 33¢.

Contact Paula Dittrick at [email protected].