KUWAIT - The Global Petroleum Perspective.

There are indications of a politically hot summer as renewed US-Iranian tensions are sending crude oil prices up and WTI may soon jump above the $78.40/barrel record reached on July 14, 2006, when Israel and Hizbullah were at war in Lebanon. Oil prices rose on May 23 as nine US warships entered the Persian Gulf for a show of force, with Iran defying the UNSC over its nuclear plan (see rim5-IraqIranMay28-07 & odd5-IraqUSEnergyMay28-07). There is also rising tension between the US and Russia (see news22-RussiaEnergyMay28-07).

Decrying near-record high gasoline prices, the American House of Representatives on May 22 voted to allow the government to sue OPEC over oil production quotas. The White House objected, saying that might disrupt supplies and lead to even higher fuel costs at the pump (see ood5-IraqUSEnergyMay28-07).

The past working week at the IPE ended on May 25 with July Brent - Brent having overtaken WTI as price setting marker- closing at $70.74/barrel. The contango was strong with August 2008 Brent closing at $72.74. Even December 2012 Brent fetched $66.95. Brent's premium over WTI was steady, having risen since mid-2006.

At NYMEX on May 25 July WTI closed at $65.20/b. The peak in its contango was the December 2008 price, at $71.37. But the December 2015 contract for WTI had an impressive level of $68.65.

July Brent on May 22 steadied above $70/b after hitting a nine-month high the previous day as violence in Nigeria stoked fears of deeper supply outages just before the summer gasoline season in the US. Brent, now more representative of the global market than the US crude oil, was up two cents at $70.51 by 1012 GMT after surging $1.07 on May 21. WTI on May 22 was down 18 cents at $66.09.

Mike Wittner of Calyon investment bank was on May 23 quoted as saying on the previous day: "We expect the situation in Nigeria to continue to support crude prices. The turmoil and uncertainty are expected to continue at least until the new president of Nigeria takes office on May 29. Brent at $70 is justified in the near-term".

Kidnappings and militant attacks had surged in the world's eighth-largest crude oil exporter since February 2006, cutting a third of Nigeria's output, which is valued for its high yield of gasoline. US gasoline stocks will be in focus on every Wednesday in the coming three months, when the US government releases weekly inventory data.

US gasoline at inflation-adjusted peak US retail gasoline prices hit a record high for the second week in a row and matched the inflation-adjusted peak reached in the early 1980s. The average price for regular unleaded gasoline on May 22 soared 11.5 cents to $3.22 a gallon. A survey of 7,000 stations showed the national price in the US jumped 11.4 cents over the previous two weeks to $3.18 a gallon.

While Brent is the world's marker crude - with WTI not allowed to trade outside the US - American gasoline is the price driver for crude oils trading across the globe. But the gasoline market in the US is a boutique business, with more than 20 types of reformulated gasolines (RFGs) being used in different American states.

On May 17, some US retailers sold their RFG at $4/gallon. American refinery margins then hit a record of $0.85/gallon - a level unlikely to be sustainable for a long time - but there could be other price peaks for US gasoline in the coming summer months.