Futures contracts for WTI, the crude oil used as a benchmark in the US, for delivery in June added US$3.56 compared to the previous day’s close.
During the morning, the Texas surpassed the US$100 a barrel after it became known that US President Donald Trump is dissatisfied with Iran’s new proposal to advance stalled negotiations and reopen the Strait of Hormuz without including an immediate nuclear dialogue.
The president expressed his position to his team in a meeting with his National Security advisors at the White House in which Tehran’s proposal was analyzed, according to The New York Times and CNN, which cite people familiar with the matter.
On the other hand, The United Arab Emirates today announced its withdrawal from the Organization of the Petroleum Exporting Countries (OPEC) and the OPEC+ alliance as of May 1 due to “disturbances in the Persian Gulf and the Strait of Hormuz,” according to the official Emirati news agency WAM.
The withdrawal of the Emirates comes at a time when OPEC production was reduced in March by almost 8 million barrels per day (mbd), 27.5% less than what was pumped in February, due to the war in Iran and the blockade of the Strait of Hormuz, which mainly affected Iraq and the countries of the Persian Gulf.
Andy Lipow, president of the firm Lipow Oil Associates, indicates in a note collected by CNBC that, even if the war ended now and the Strait of Hormuz were reopened, it would take between four and six months for crude oil markets to stabilize.
“The longer the conflict continues, the higher the price (of oil) will be, especially as reserves are reduced to critical operating levels,” he notes.