All you wanted to know about sanctions on Iran

May 15, 2018, 15:08
All you wanted to know about sanctions on Iran

Oil prices kept their footing on positive grounds on Tuesday, as markets tightened on the Organization of the Petroleum Exporting Countries' (OPEC) continuous effort to trim output and the upcoming United States sanctions against Iran.

Benchmark Brent crude oil LCOc1 reached $78.60 a barrel, up 37 cents and its highest since November 2014. U.S. light crude was 5c higher at $71.01 a barrel, also not far off its highest since November 2014.

"Strong global oil consumption has come up against a 1½ -year-old deal led by OPEC and Russian Federation to manage crude supply among producers".

President Trump's decision to pull the US out of the Iran nuclear deal "constitutes a major geopolitical shift" which could trigger a move in the direction of "stagflation", a global strategy team at Citi, led by Mark Schofield, said in a research note, CNBC reported.

The revised demand growth predictions come at a time when the global crude market is also facing other significant supply-side question marks, such as the impact of the imposition of U.S. sanctions on Iranian output and the ongoing struggles of the Venezuelan oil sector.

"The commitment of Saudi Arabia and the rest of OPEC to the production cuts is a major factor in supporting the price at the moment as well as the possibility of reduced exports from Iran due to sanctions", said William O'Loughlin, investment analyst at Rivkin Securities.

At 1100 GMT, ICE July Brent crude futures were trading at $79.14/b, up 91 cents from Monday's settle, while NYMEX June WTI crude futures were 65 cents higher at $71.61/b.

Market observers and analysts argue that US energy stocks are in a position to outperform broader equity markets this year, even if oil prices don't move higher.

"For 2018, oil demand growth is forecast to increase by around 1.65 million barrels a day to average 98.85 million barrels a day", the report said, revising upward from its forecasting last month.

OPEC figures published on Monday showed that oil inventories in OECD industrialized nations in March fell to 9 million barrels above the five-year average, down from 340 million barrels above the average in January 2017.

YOU MIGHT ALSO LIKE
popular