Oct. 01–Crude oil closed above $75 a barrel for the first time since 2014 as a slowdown in U.S. production fueled concerns about declining exports from Iran and Venezuela.
The number of rigs drilling for American crude dropped for a second consecutive week due to pipeline bottlenecks in the Permian Basin in West Texas. Meanwhile, importers are scaling back purchases of Iranian crude, and Venezuela’s output continues to fall amid the economic and political crisis there.
The surge in crude oil has boosted the cost of gasoline at a time when prices typically fall alongside seasonal demand. The average price of regular unleaded in the Houston area increased about a cent to $2.54 a gallon, while the national average rose about 2 cents to $2.87 a gallon, according to GasBuddy, which tracks fuel prices nationwide.
Prices at the pump have raised concerns among Republicans looking to retain control of both House and the Senate during the midterm elections in November. President Donald Trump last month called on the world’s largest oil producers to keep prices in check by boosting output, but they declined to do so immediately.
Patrick DeHaan, head of petroleum analysis for GasBuddy, said gas prices this fall could edge close to $3 a gallon, a threshold that begins to effect consumer sentiment and spending.
“I think that would be a problem ahead of the midterms,” he said.
Oil prices are expected to continue to rise in the coming weeks as the U.S. prepares to impose additional sanctions on Iran in early November. Top traders have forecast crude may top $100 a barrel amid speculation that backup supplies are scarce.
Crude prices of rose more than $2 a barrel in New York to settle at $75.30 a barrel, the highest settlement since Nov. 24, 2014.
Following Trump’s most-recent criticism of the Organization of Petroleum Exporting Countries over high prices, the president and King Salman bin Abdulaziz of Saudi Arabia talked on the phone Saturday about a strategic partnership and global economic growth, Al Arabiya TV reported, without providing more details. The White House said “issues of regional concern”‘ were discussed.
In the U.S., onshore rigs targeting oil fell by three last week to 863, according to data released by the Houston oilfield service company Baker Hughes on Friday. The number of operating rigs in the Permian Basin in West Texas and New Mexico dropped by two to 486.
Material from Bloomberg was used in this report.
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