Brent crude futures reached their projected growth target yesterday, supported by the latest EIA data showing a significant weekly decline in US oil stockpiles. These figures aligned with earlier statistics released by API. The reduction in inventories follows the return of US refineries from scheduled maintenance and an increase in refining activity – ahead of the summer driving season, which begins in two months.
A more substantial driver of rising oil prices could be developments in US policy regarding Iran. Recent measures have tightened sanctions on Iranian oil exports, including stricter enforcement of secondary sanctions. However, market sentiment remains divided, with some traders sceptical that Iranian barrels will be entirely displaced. Many leading oil traders maintain a bearish outlook, anticipating that efforts to curb oil prices may outweigh other policy considerations.
Within the US oil and gas sector, there is notable caution. Industry representatives have voiced concerns over policy-related uncertainty, which could raise production costs amid ongoing volatility in oil prices. To justify new drilling investments, prices would need to stabilise between 75 and 80 per barrel. Current sector forecasts project WTI prices at 68 by late 2025,74 by 2027, and $82 by 2030.