MARKET WATCH: Crude oil benchmark prices drop before US oil sanctions on Iran
Light, sweet crude oil prices dropped more than $1/bbl on the New York market Nov. 1 while Brent crude oil prices dropped more than $2/bbl in London in anticipation of US oil sanctions being fully implemented against Iran.
Meanwhile, US officials agreed that eight nations—including South Korea, Japan, and India—will receive exemptions enabling them to keep buying oil from Iran after Nov. 4, Bloomberg reported.
Sara Vakhshouri, president of SVB Energy International in Washington, DC, estimated Iran’s oil production dropped to 3.33 million b/d from 3.51 million b/d during October. She expects that Iran’s November exports will be about 1 million b/d total to China, India, Turkey, and South Korea.
“We don’t think that Russia…has a capacity to swap any oil for Iran in China,” Vakhshouri told OGJ via e-mail. “We expect to see higher oil shipments and delivery of oil than what was permitted by US administration under the waivers,” she said.
China is expected to continue to be Iran’s biggest oil buyer although the oil may remain in storage, which would comply with US sanctions.
“It is important to distinguish sold oil from delivered oil,” she said, adding stored oil is not reflected in the actual market supply of any given month.
Separately, US President Donald Trump and his cabinet officials put a positive spin on talks with China, but some analysts doubt the two countries will overcome a trade impasse.
A Wall Street Journal poll of 11 investment banks showed that Brent crude is expected to average nearly $75/bbl in 2018 while light, sweet crude oil is expected to average $68/bbl.
The latest estimates mark increases of $2 for Brent and $1 for US oil futures compared with their September forecasts.
Energy prices
The December light, sweet crude contract on the New York Mercantile Exchange dropped $1.62 on Nov. 1 to $63.69/bbl. The January contract fell $1.63 to settle at $63.81/bbl.
The NYMEX natural gas price for December was down 2¢ to a rounded $3.24/MMbtu.
Ultralow-sulfur diesel for December dropped 5¢ to a rounded $2.20/gal. The NYMEX reformulated gasoline blendstock for December fell 3.5¢ to a rounded $1.72/gal.
Brent crude oil for January was down $2.15 to $72.89/bbl on London’s International Commodity Exchange. The December contract dropped $2.10 to $72.96/bbl. The gas oil contract for November fell $23.50 on Nov. 1 to close at $685.75/tonne.
The Organization of Petroleum Exporting Countries’ basket of crudes average for Nov. 1 was $72.64/bbl, down $2.60.
Contact Paula Dittrick at [email protected].
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.
