Yet the parallels should not be overstated. Aggregate disruptions from Syria, Yemen and the former Sudan are significantly less than last year's disruption in Libyan exports. And while unrest in the MENA region continues to simmer, these developments are occurring against a strikingly different economic and geopolitical backdrop. As noted in an EIA report issued at the end of February (The Availability and Price of Petroleum and Petroleum Products Produced in Countries Other Than Iran), there is some evidence that the strengthening of international sanctions on Iran, including measures with both immediate and future effective dates, may already be causing some adjustments in oil supply patterns. Geopolitical tensions in the critical Persian Gulf region, and statements by various parties related to those tensions, are other factors being weighed by oil market participants. A string of reductions in refining capacity in the U.S. East Coast and the Caribbean (Potential Impacts of Reductions in Refinery Activity on Northeast Petroleum Product Markets), as well as on the European side of the Atlantic basin, is altering both crude and product market dynamics. Meanwhile, the European economic recovery faces lingering credit issues, notably in Greece, while the U.S. recovery is proving stronger than expected.
The U.S. Energy Information Administration's latest Short-Term Energy Outlook (STEO), released March 6, reflects a higher forecast for crude oil prices than the previous edition. The forecast for the average 2012 WTI crude oil spot price was increased from $100 per barrel in last month's STEO to $106 per barrel. Because of constraints in transporting crude oil from the U.S. midcontinent region and the expected continuing discount for WTI relative to other world crudes (see This Week In Petroleum, November 30, 2011), the increase in the forecast 2012 U.S. average refiner acquisition cost of crude oil is larger, from $105 per barrel to $115 per barrel.
While retail gasoline prices have generally followed the rise in crude oil prices, time will tell whether refinery closures in the Philadelphia area and other parts of the Atlantic Basin will have a further impact on prices. The retail price of regular gasoline increased from $3.44 per gallon on January 30, 2012 to $3.72 per gallon on February 27, 2012. EIA now expects the monthly average regular-grade gasoline retail price to peak in May at $3.96 per gallon, 32 cents per gallon higher than forecast in last month's STEO and 6 cents per gallon higher than May 2011 (Figure 1). There is significant regional variation in the forecast, with average expected prices on the West Coast during the summer driving season running about 25 cents per gallon above the national average and expected prices on the Gulf Coast averaging about 15 cents per gallon lower. Both the STEO and the accompanying Market Prices and Uncertainty Report provide quantified measures of the high level of uncertainty surrounding the price forecast derived from recent futures and options prices.