S&P Global's Dan Yergin: $70-$85 seems like a reasonable range for oil prices

Summary

Dan Yergin discusses the recent drop in crude oil prices, noting that while WTI has fallen to around $71.79 and Brent to $75.55, shipping through the Strait of Hormuz remains severely limited at 25% of normal. He highlights Iran's intent to impose fees on passage, creating a persistent risk premium. On gasoline, inventories are at historic lows and likely to tighten further through summer exports, keeping pump prices relatively sticky. Yergin forecasts crude oil will trade in a $70-$85 range, supported by ongoing insecurity, and does not see a return to the low $60s.

• Crude oil prices dropped sharply due to easing shipping fears but Strait of Hormuz traffic at only 25% of normal.
• Iran is attempting to assert fee/toll authority over the Strait, adding uncertainty.
• Gasoline inventories are historically low and expected to decline further due to summer exports.
• Gasoline prices have fallen about 60 cents but historically lag crude oil declines.
• Yergin expects oil prices to remain in the $70-$85 range, well above the early-year low $60s.