Oil Prices Still Subject to "Iranian Premium," Analyst Says

Peter Beutel, president of Cameron Hanover, told CNBC’s “Power Lunch” that an agreement to release captured British sailors doesn’t yet remove the “Iranian premium” on the price of crude oil.

“I’d say that we added about $6 during the run-up,” Beutel said Wednesday. “So, (the premium) is not out yet. Even though we’ve solved this problem, the larger problem remains – (Iran’s) nuclear issue. Iran and the West seem to be on a collision course long-term.”

He said he expects the price of oil to climb through mid-May. It’s unlikely that prices will surpass $78.40 a barrel, last year’s high, and prices then will gradually decline, perhaps into the $50-a-barrel range, he said.

“I think a lot of companies that are seeing oil prices come back after the August–January sell-off are going to say these (current) prices are going to be here forever so let’s go ahead and raise our prices,” he said. “I see this as very inflationary. Potentially, I see it as being recessionary because I don’t think the Fed will be able to fight recession with the inflation this is going to create.”

Jack Aydin, energy analyst and senior managing director at Keybanc Capital Markets, said a recession would cut demand, creating excess OPEC capacity and falling prices.

He said oil is unlikely to climb to $70 a barrel soon, but the price depends on the political situation in the Middle East.