Brent for July settlement rose as much as $0.90 to $80.18/bbl on the London-based ICE Futures Europe exchange, the highest since November 2014, and traded for $79.79. Crude oil continues to remain glued to three-year highs and WTI crude prices testing the 72.00/barrel price level as Middle East tensions continue to bolster oil prices.
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After the plans for the USA to pull out of the Iran nuclear deal became known, oil prices surged over the uncertainty of what would happen to Iran’s oil industry if the U.S. reimposed sanctions, limiting Iran’s production.
This is published unedited from the PTI feed.
The difference between the two benchmarks briefly widened to more than $8 a barrel, the widest gap since April 2015, reflecting surging USA crude supplies and a greater geopolitical risk to Brent-based crudes.
In addition, President Trump’s withdrawal from the Iran nuclear deal has heightened the political uncertainty about the trajectory of that country’s oil production.
Both demand and supply have driven the steady recovery in prices. “In addition, there are downside risks to Iranian crude oil exports”.
The IEA said global oil demand would average 99.2 million bpd in 2018.
Gasoline demand is up 0.7 percent from a year ago over the past four weeks to 9.4 million bpd.
Russia’s largest oil producer, in which British oil major BP owns a 19.75 stake, said production of liquid hydrocarbons, or oil and gas condensate, stood at 4.57 million barrels per day (bpd) in the first three months of 2018.
For the fifth straight month, OPEC in March set a fresh record for complying with its agreed oil-production cuts, with the goal of re-balancing the market finally in sight. However, since the driving shock (the anticipated reduction in future supplies) will result in greater scarcity, the flat price must rise. Khoshrou had accompanied Iran’s Foreign Minister Javad Zarif on the China trip, before the minister headed to Europe to discuss the Iran nuclear deal and the consequences of the USA withdrawal with European Union leaders.
While it’s “too soon to say what will happen this time”, the agency said, Iran’s fellow OPEC members could fill the gap because their pact to restrain supply leaves them with spare production capacity.
But high oil prices could hit consumption, the International Energy Agency warned on Wednesday, lowering its global oil demand growth forecast for 2018 to 1.4 million from 1.5 million barrels per day (bpd). “Once you get past that, all of a sudden (you’re) looking at 3 million barrels per day of fresh crude consumption”.
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Lastly, Iran’s crude oil sales will be limited under the National Defense Authorization Act of 2012, as the USA departments of State, Energy and Treasury will allow ongoing but reduced purchases of oil from Iran, termed “significant reduction exceptions” on a country-by-country basis if they demonstrate a commitment to substantially decrease oil purchases (usually at least a 20% reduction).
