This week crude prices have increased based on tensions with Iran in the Middle East. Reports of attacks on crude ships, drones attacking Saudi Arabia pipelines, Iran carrying missiles at sea, UK and US evacuating embassies in Iraq, and the US sending aircraft carriers and defense systems to the region are all putting a huge risk premium on crude prices. Crude prices would be going even higher, but the tensions with China and the trade war are keeping a lid on a full breakout to the upside. President Trump is sending messages that he wants to talk with Iran. If diplomatic talks can be scheduled and firepower starts to recede, I expect to see prices fall right back down. Next week will be a big week for crude. In addition to the geopolitical issues, the US is about to enter its peak demand season. World demand is staying neutral at the moment and on pins and needles with the trade war. Supplies are ample, but if Venezuela and Iran truly can’t get crude to market, then we could experience some supply tightness in Q3 and Q4. Next week will be very interesting to watch.
In local news, just as retail prices were starting to recede a little, prices have jumped right back up. I expect to see retail prices hold or climb on both gasoline and diesel going into Memorial Day weekend.
Propane prices are at the lowest level of the past three years. I recommend everyone filling their tanks right now. There is much more risk of upside price movement in propane. Contracts will be coming out in a month or so. Stay tuned for more info.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.