Brent and West Intermediate Texas crudes traded generally sideways last week, despite the pronounced weakness at the end of the week. Brent fell $0.20 a barrel to average $73.65/Bbl while WTI was flat on an average basis.
This week, Brent is expected to average $74.50/Bbl, Ashley Petersen, lead oil market analyst at Stratas Advisors said late Monday. She added while the recovery is far from complete, the Brent-WTI spread has widened slightly during the past several weeks – a trend expected to continue as Canada’s Suncor continues to bring back online its damaged Syncrude facility.
On Tuesday, Brent was trading up $0.52, or 0.71%, in London at $74.27/Bbl at 11:31 a.m. DST. WTI was trading at $69.10/Bbl, up $0.09 or 0.13%, Kallanish Energy notes.
As the U.S. re-instated its first set of sanctions against Iran yesterday, we could see further rhetoric from Iran about lost oil supplies and OPEC not being responsible for filling the supply gap, Peterson noted.
“Visible weekly product stocks remain generally at or below five-year averages, a boon for crude demand and margins. Strong runs will continue through the summer, supporting prices,” she explained. “While concerns around the economic impact of tariffs are valid, the physical impact of these tariffs on fuel will likely not be felt for several months,” she added.
The U.S. sanctions targeting the Iranian oil industry will be effective on Nov. 5, but Stratas believes “South Korea remains a potentially significant opportunity for American crude exports.”
The Asian country buys roughly 11% of Iranian crude exports, and because of the threat of secondary sanctions, it’s reportedly looking for alternative supplies.