Oil Set to Rise in Summer if US Sanctions Remain and OPEC+ Keeps Deal

The summer driving season may just have gotten more expensive.

US and global crude oil prices are near six-month highs as the White House said Monday it would not extend exemptions to Iran’s oil sanctions that were set to end in May. The news triggered an immediate spike in oil prices and comes as gasoline demand seasonally rises as Americans prepare for summer road trips.

West Texas Intermediate graph

Beth Mosher, spokeswoman for AAA, which tracks gasoline prices, said based on the Iranian news, AAA forecasts nationwide gasoline prices to rise over $3 a gallon this summer. That’s 15 cents a gallon more than current prices and above last summer’s prices, she said.

Brent crude graph

The end to Iranian sanctions waivers throws uncertainty into a market already dealing with lower global supply due to agreed-upon production cuts by Organization of Petroleum Exporting Countries. Other Opec members are in trouble, too. US sanctions on Venezuela come into effect at month’s end, and renewed tensions in Libya threaten to disrupt their supply.

Via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza