U.S. crude oil hasn’t traded at $95 a barrel in since 2014, but this is the year that could change.
Energy expert John Kilduff counts Iran sanctions as the top reason West Texas Intermediate (WTI) could climb as much as 30 percent by winter, and that could spell $4 a gallon unleaded gasoline at the pumps.
“The global market is tight and it’s getting tighter, and the big strangle around the market right now is what’s in the process of happening with Iran and the Iran sanctions,” the Again Capital founding partner said on CNBC’s “Futures Now.”
He added: “These Iranian barrels that we’re going to lose, it’s really going to hurt. It’s really going to make a difference and tip the scale in my view to an upside surprise.”
His thoughts came as WTI crude oil exceeded $70 a barrel on Thursday, and rallied to one month highs. According to Kilduff, there’s a high likelihood the commodity will break $75 within weeks.
But that will feel cheap compared to what comes next. Iran’s oil exports are plummeting, as refiners scramble to find alternatives ahead of a re imposition of U.S. sanctions in early November. That in turn has helped drain a glut of unsold oil.
“To the extent we’re seeing the Iran barrels lost to the market, you’re looking at a WTI price and Brent in the $85 to $95 range, potentially,” Kilduff said.
Pair Iran with a booming U.S. economy and soaring driver demand for gasoline, and Kilduff contended that Wall Street is coming up with a bullish scenario for crude that it hasn’t had in years.
“There has been incredible U.S. refinery demand, and there has been huge U.S. driver demand for gasoline. The fundamental picture is the strongest I’ve seen in quite some time,” Kilduff said. “Everybody has got a job, everybody is driving to that job, and they’re going to continue to drive to that job no matter what gasoline costs.”
On Friday, WTI crude oil settled at $69.80 a barrel while ICE Brent crude closed at $77.42.
–Reuters contributed to this article.