MARKET WATCH: Crude oil prices climb as US talks sanctions on Iran’s trading partners
The light, sweet crude oil contract for August delivery jumped more than $2/bbl on the New York market to settle above $70/bbl after a senior official said the White House expects all countries to cut oil imports from Iran to zero by Nov. 4 or risk facing sanctions themselves.
A senior US State Department official told the Wall Street Journal that President Donald Trump’s administration is pushing to isolate Iran politically and economically. Trump plans unilateral US sanctions against Iran, effective Nov. 4.
In May, the president said the US was exiting an international agreement in which sanctions against Iran were lifted in exchange for its cooperation on its nuclear program.
Sara Vakhshouri, president of SVB Energy International in Washington, DC, told OGJ that the Trump administration is forming a trade alliance against Iran by using the pending sanctions as a component of US trade negotiations with members of the European Union and China.
She also noted oil market participants are very sensitive right now to any supply disruptions or geopolitical threats. Traders are worried about how much spare capacity exists.
Buyers of Iranian crude had expected US officials would allow time for them to gradually reduce their oil imports by issuing sanctions waivers if they demonstrated efforts to cut their purchases of Iranian oil. Condensate also is expected to be included in the US sanctions on Iran.
But the State Department officials on June 26 said that the Trump administration doesn’t plan to issue any waivers and would instead ask other Middle Eastern crude exporters to ensure world oil supply.
Vakhshouri said the US and Russia have reached an agreement that Russia, alongside Saudi Arabia, will increase oil production to offset the loss of Iran’s oil exports.
The Organization of Petroleum Exporting Countries, of which Saudi Arabia is the biggest producer, agreed last week to stop overcomplying with existing production-cut targets of 1.2 million b/d, effective on July 1. This means OPEC members who are able will increase production.
Energy prices
The August light, sweet crude contract on the New York Mercantile Exchange gained $2.45 to settle at $70.53/bbl on June 26. The August price was up $2.24 to $69.28/bbl.
The NYMEX natural gas price for July increased 1.6¢ to a rounded $2.94/MMbtu. The Henry Hub cash gas price held unchanged at $2.93/MMbtu on June 26 compared with June 25.
Ultralow-sulfur diesel for July increased nearly 3¢ to a rounded $2.13/gal. The NYMEX reformulated gasoline blendstock for July gained 2¢ to a rounded $2.07/gal.
Brent crude oil for August climbed $1.58 to $76.31/bbl on London’s International Commodity Exchange. The September contract increased $1.59 to $76.14/bbl. The gas oil contract for July was $643.75/tonne, up $1.25.
OPEC’s basket of crudes averaged $72.69/bbl on June 26, up 54¢.
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.
