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Oil supported by Iran sanction fears, holds near 2014 highs

16 May, 2018, 08:07 | Author: Priscilla Morrison
  • Oil near Nov. 2014 highs firm as markets tighten amid OPEC cuts, Iran sanctions

Looking at USA crude oil stocks, the most recent EIA figures (May 9) showed falling crude oil stocks and falling gasoline inventories.

Greg McKenna, chief market strategist at futures brokerage AxiTrader, says it is still "far from certain" that sanctions "will bite in the way intended".

Despite the dips, both financial oil benchmarks remained close to their November 2014 highs of $79.47 and $71.92 a barrel respectively, reached the previous day.

Once the sanctions are reinstated later this year, traders expect a massive decline from 200,000 to about 1 million barrels per day (bpd) in Iran's oil exports, which may put the already squeezed crude markets at risk of becoming undersupply. China's refinery runs rose almost 12 percent in April from a year earlier, to around 12.1 million barrels per day, marking the second-highest level on record on a daily basis, data showed.

However, imports have fallen this year, partly reflecting a cut in supplies to South Korea by the National Iranian Oil Co due to lower production and the start of a new splitter, sources have said.




These events surrounding the Middle East has pushed Brent crude to the highest level since March 2015, which is now at $7.3 per barrel. Oil production in post-Arab Spring Libya is only 400,000 barrels per day, down from 1.6 million before the fall of Qaddafi. Sharenow also estimated oil to go beyond the $80 level in the short term.

"If Iranian crude is really taken off the water, it's going to impact Brent much more than it's going to impact WTI", Zimmerman said. Refined oil product exports soared 46 percent on the year in April, but eased from the all-time high in March.

"The API inventory data in the USA fits with. a topping pattern - or at least a decent pause - for oil prices at the moment", said Greg McKenna, chief market strategist at futures brokerage AxiTrader.

Iran will restart its uranium enrichment if it can not find a way to save the 2015 nuclear deal with the European Union after the United States pulled out last week, Tehran's government spokesman said.

The surge in oil prices comes at a time of tight supply amid record Asian demand and voluntary output restraint totaling 1.8 MMBPD by the Organization of the Petroleum Exporting Countries and non-OPEC producers, including Russian Federation. 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.

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