Watch: Barron’s Managing Editor Daren Fonda and OPIS Chief Oil Analyst Denton Cinquegrana discuss what’s ahead for oil this week.

Transcript:

DAREN FONDA: I’m Daren Fonda, managing editor at Barron’s. Today, I’m talking to Denton Cinquegrana, chief oil analyst at OPIS. Welcome, Denton.

DENTON CINQUEGRANA: Hey, Daren.

DAREN FONDA: Denton, Hurricane Milton is causing a lot of damage in Florida. It’s gonna be one of the costliest storms on record. What do you think the impact is going to be on oil and gas prices?

DENTON CINQUEGRANA: Yeah. Well, first of all, part of the good news, and I don’t know if there’s much good news when it comes to a hurricane, but there’s no refineries in Florida. All their fuel comes from the Gulf Coast, from refineries in Texas and Mississippi and Alabama. The one thing that’s gonna be a major issue there is logistics, getting the fuel from the terminals to the retail stations. And right now, there’s obviously cleanup that has to be done, power outages that need to be restored, and things like that. So it’s mostly a logistics thing. Those that are up and running, they really can’t change out prices too much because of the state of emergency, and there’s pretty strict gouging laws that penalties would be pretty severe if, gouging has been proved. So, nationally, I don’t think it has too much of an impact on gasoline prices and even in Florida where prices are a little bit more than three dollars a gallon.

DAREN FONDA: So gas prices have been inching up a little bit. Is that because of tensions in the Middle East? And what do you think the next big catalysts are for the market?

DENTON CINQUEGRANA: Yeah. You’re absolutely right, Darren. The geopolitical tensions around recently firing missiles at Israel has played a big role. It has lifted oil prices, WTI back up over seventy five dollars a barrel. Briefly, Brent got over eighty dollars a barrel in response. So, yeah, that’s gonna lift retail gasoline prices at least a little bit. But, again, you know, if cooler heads end up prevailing, I think that downtrend in gasoline prices at the retail level starts to, you know, resume, and we get back down towards that three dollars a gallon level.

DAREN FONDA: Can you talk a little bit about, Iran’s production and, how much production it has that, could be at risk of being disrupted?

DENTON CINQUEGRANA: Yeah. In 2023, they were said to be producing about three point nine million barrels a day. So let’s round it up and call it four million barrels a day. So, yeah, four million barrels a day off the world stage, if you will, is not insignificant.

However, OPEC plus and, really, Saudi Arabia and United Arab Emirates, are really kinda chomping at the bit here to get some production back online. We saw earlier in the summertime when OPEC plus said they were gonna restore some barrels back at the start of the fourth quarter. When we got into September when prices started to drop, they said, hey, we’re gonna revisit this in December. So any lost production from Iran is probably gonna be filled in with some of the OPEC spare capacity. Now you can’t just flip the light switch and get that on, but it could get to the market relatively quickly.

DAREN FONDA: And, Denton, what’s your outlook for 2025?

DENTON CINQUEGRANA: Yeah. Like everyone else and a lot of the big investment banks, they’re expecting more OPEC plus barrels on the market, demand to be up maybe a little bit, maybe not as strong as originally anticipated, and that’s gonna leave oil in a bit of a surplus.
Liquids in a bit of a supply demand surplus, and that should put some pressure on prices for at least oil. Probably good news for for the refiners because you could probably see, gasoline prices, and gasoline’s obviously very cyclical. But gasoline and diesel, if the economy remains on decent footing at least, it should be supported for the diesel market as well.

DAREN FONDA: Thanks, Denton. Appreciate your insights.

DENTON CINQUEGRANA: Anytime, Daren. Thank you.