On Monday, the prices of oil have rose to their highest levels since late-2014.
“There’s a lot of nervousness over the Iran situation”. The reasons are by now familiar to most readers who pay attention to the daily whims of the oil market: OPEC cuts, falling inventories, geopolitical unrest and strong demand growth, to name a few.
Oil prices have been climbing partly because of expectations that U.S. president Donald Trump will abandon the 2015 Iran nuclear deal, which allowed Tehran to export more crude, reports CNN.
The increased geopolitical risks and the recent message from the U.S. producers highlighting some risks to the USA supply in 2018 points to some risks to United States and global oil market balances in the near term. Looking at reactions in markets, crude oil prices weakened immediately following the EIA report.
On Thursday, Iranian regime’s foreign minister said that Trump’s demands to fix the flaws in the nuclear deal were unacceptable and that Iran would not implement them.
Brent crude has now got a technical upside target just below $82/b, the 61.8% retracement of the 2014 to 2016 sell-off. “This, combined with constraints in (OPEC) production, could lead to higher prices”.
“We’ll see what happens”, Trump said last week about his decision on the Iran deal.
“It’s this recovery in the USA dollar – one based on the data flow in the US against the rest of the world – which is catching many by surprise and causing ructions across emerging markets”, said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
Oil prices in this case would jump by another $5 to hover around $80 for the Brent benchmark. It powers everything that we use every day. Yet the group’s most important member, Saudi Arabia, says the job isn’t done and is championing a push to further tighten the market and boost prices.
Oil prices have dipped a bit this week, but still remain at their highest levels in almost three and a half years. The next largest proved oil reserves are in Saudi Arabia with 268 billion barrels and Canada with 173 billion barrels.
The inaugural ceremony of the exhibition was attended by Iranian Oil Minister Bijan Namdar Zanganeh, Gas Exporting Countries Forum (GECF) Secretary General Yury Sentyurin, Croatian Deputy Prime Minister Martina Dalic, and a number of Iranian parliament members, ambassadors of other countries in Iran, directors of Iranian oil, gas and petrochemical industries, and representatives of some renowned global companies.
“It may signal stronger-than-expected demand in Asia”, Fritsch said. Member nations of OPEC and Russian Federation earlier engineered a large output cut lead by Saudi Arabia, which is seeking to push oil prices up to $80 a barrel to help fund its planned economic overhaul.
The weeks leading up to the June 22 OPEC meeting could bring more bullish rhetoric from Saudi Minister of Energy and Industry Khalid Al-Falih.
The only country that can produce more at the moment is Saudi Arabia, but with the summer months approaching and new supply agreements being signed with Poland and China, the pressure on Saudi oil fields will be enormous. And China, a huge oil importer, could also push back.