Oil markets firm amid OPEC cuts, Iran sanctions

Oil markets firm amid OPEC cuts, Iran sanctions

"Saudi Arabia appears to be focusing more on pushing up crude higher rather than restoring the balance in oil's supply and demand, and that is underpinning prices". If demand growth continues to be strong-as now expected-an already tight oil market could become even tighter amid geopolitical concerns, driving oil prices further up.

Since the accord was reached at the end of 2016, oil prices have climbed to their highest in almost four years to exceed $77 a barrel, up from $30 in early 2016.

A high-profile Iranian official has pointed out that the potential US sanctions that US President Donald Trump touched upon last week have not so far affected the flow of oil supplies to worldwide markets, despite earlier predictions. "However, analysts say the stage was already set for this week's 4-percent gain for the S&P 500 energy sector".

The world is now watching the growing tensions in the Middle East, and oil market analysts are guesstimating just how much Iranian oil supply the renewed US sanctions could stifle.

Markets have generally tightened as the Organisation of the Petroleum Exporting Countries (Opec), led by Saudi Arabia, has been withholding supplies since 2017 in order to push up oil prices.

Unfortunately for motorists, that glut has been drained by a combination of strong global demand and production cuts from Venezuela and a collection of OPEC and non-OPEC oil producers.

Oil held near $71 a barrel on heightened political risks in the Middle East following unrest in Gaza and the return of sanctions against Iran. March inventories were only 9m barrels above 5 year averages.

Non-OPEC oil producers such as Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan, and South Sudan agreed to reduce output by 558,000 barrels per day starting from January 1, 2017.

"We expect that after the OPEC+ agreement expires by the end of 2018, it could take up to five years for its oil production to return to 2016 levels, which will in turn constrain overall GDP growth relative to historical trends", its report read.

"Is OPEC, possibly together with its non-OPEC peers, going to fill the void potentially left in global supply by Iran?". This domestic production increase will have a significant moderating influence on future oil prices.

"Although oil could venture higher in the near term, robust production from U.S. shale remains a threat to higher oil prices", he said.

While a huge accretion to Excess Crude Account is expected, public finance analysts also said the current situation will impact positively on the implementation of Nigeria's 2018 budget which was benchmarked on $45 per barrel and the production of 2.3 million barrels per day.

Related:

  • Taliban militants storm Afghan provincial capital, clashes continue

    Taliban militants storm Afghan provincial capital, clashes continue

    The latest reports say the terrorist group is still two-miles away from the city center. and the battle is still underway. The Taliban claimed the assault on Farah in statement to media, saying they had attacked from multiple directions.
    Local scientists help analyze Hawaiian volcanic eruptions

    Local scientists help analyze Hawaiian volcanic eruptions

    Kilauea's eruption began on May 3 and his sparked evacuations and destroyed dozens of structures in the lava flow zone. The new eruption was reported Monday in the Lanipuna Gardens subdivision, an area that has already been evacuated.
    Erdogan called Israel a terrorist state

    Erdogan called Israel a terrorist state

    The Palestinian protests will be continued on Tuesday, too as the culmination of the "Nakba" commemoration is near. "Israel is carrying out state terror at the moment".
  • David Tepper expected to buy Carolina Panthers for $2.2 billion

    David Tepper expected to buy Carolina Panthers for $2.2 billion

    ESPN also confirms Tepper, who is worth $11 billion according to Forbes magazine, is committed to keeping the team in Carolina. According to reports , the sale would be worth $2. 2 billion and Tepper is reportedly keen to keep the team in Charlotte.
    Margot Kidder Dies, Aged 69

    Margot Kidder Dies, Aged 69

    There also were episodes of freakish behavior, and an auto accident that left her bankrupt and partially paralyzed, People added. Lois Lane never wavered from her dedication to her job, but she was also very aware of her role as Superman's "girlfriend".
    South Korea hails Kim Jong Un's move to dismantle nuclear test site

    South Korea hails Kim Jong Un's move to dismantle nuclear test site

    He returned again to North Korea last week for a second meeting , after which Kim agreed to the release of the three Americans. Trump labeled Kim "Little Rocket Man", and the North Korean leader called the president a "mentally deranged USA dotard".
  • Facebook says posts with graphic violence rose in early 2018

    Facebook says posts with graphic violence rose in early 2018

    One hypothesis for the increase, Schultz said, is that "in [the most recent quarter], some bad stuff happened in Syria". The rate at which we can do this is high for some violations, meaning we find and flag most content before users do.
    Gas prices are up again

    Gas prices are up again

    AAA recommends drivers get their battery tested, check for engine coolant leaks and examine the condition of their tires. It's increased almost 15.4 cents per gallon in the last month and stands 53.8 cents per gallon higher than a year ago.
    Severe storm warning for DeKalb County until 5:15 pm

    Severe storm warning for DeKalb County until 5:15 pm

    Some of the storms could produce large hail and damaging winds of 60 miles per hour or more, the weather service said . Monday , radar images showed the storms in the Chambersburg and moving east.
  • Liverpool's final two games: Slim margins between success and regret

    Liverpool's final two games: Slim margins between success and regret

    Salah was substituted in the 84th minute and was given a standing ovation from Liverpool fans, and even some Brighton supporters. Dejan Lovren added a second before Dominic Solanke and Andy Robertson registered their first goals for the club in the 4-0 win.
    Kevin Feige Says There Are Plans at Marvel Studios for Ms. Marvel

    Kevin Feige Says There Are Plans at Marvel Studios for Ms. Marvel

    Not only is she capable of stretching her limbs to great lengths and widths, but she can also grow or shrink to incredible sizes. What makes Captain Marvel's potential to shake up the MCU interesting would be the fact the film is set in the 1990's.
    The Supreme Court paves the way for states to legalize gambling

    The Supreme Court paves the way for states to legalize gambling

    Federal courts struck down that measure as violating the 1992 Professional and Amateur Sport Protection Act, or PASPA. Conversely, he said, there may be benefits to having more of the sports wagering done through legitimate outlets.

Comments

Other news