Oil Prices Head Higher On Huge Crude Draw

05 July, 2018, 00:55 | Author: Regina Lloyd
  • A woman shops in a supermarket in Doha Qatar

Oil hesitated at the start of the week, but traders are coming back to the buy side of the table as markets realized Saudi Arabia is in no rush to push oil prices higher again after recently pushing OPEC to lift production limits just last month.

"Our goal is to increase pressure on the Iranian regime by reducing to zero its revenue on crude-oil sales", Brian Hook, the State Department's director of policy planning, said at a briefing.

The vice president also noted that the "vulnerable" social layers should be helped after re-imposition of sanctions.

Vijay Valecha, chief market analyst at Century Financial Brokers, said the UAE's crude oil production peaked in October 2016 at 3.13 million bpd and has declined since then in line with the Opec production cuts.

Last month President Donald Trump withdrew the United States from the landmark Iran nuclear deal, re-imposing U.S. sanctions that had been suspended in return for curbs on Tehran's nuclear programme.

Saudi Arabia doesn't seem to be in a rush to fulfill Trump's request for an extra 2 million barrels per day.

In May, the USA retreated from a multilateral deal with Iran regarding its nuclear disarmament program, and imposed sanctions to limit the world's fourth largest oil exporter's access to global markets.

Turkey has also said it would keep up Iranian crude imports, while China, the largest consumer of Iranian crude oil, has criticised the USA for withdrawing from the deal.




Still, Iran vowed on Sunday to defeat United States efforts to block its oil exports and warned rival producer Saudi Arabia it would never take Tehran's "place" on the global oil market.

This most recent Twitter post also made it look like USA policy is reliant on Saudi Arabia's spare capacity to fill global supply gaps, the analysts wrote.

Saudi Arabia later acknowledged a call had taken place between Trump and Saudi Arabia's King Salman, but did not mention any production targets.

Most of the rally has been fueled by supply disruptions in Canada, Venezuela and Libya as well as the looming sanctions against Iran. Global benchmark Brent fell 2.4 percent in the session, changing direction from last week when it gained more than 5 percent.

She warned that the handling of any economic or oil crisis will "require diplomacy, delicate partnerships and technical knowledge".

While OPEC leader Saudi Arabia will pick up the slack, Morgan Stanley believes oil markets will be undersupplied by around 600,000 in the second half of 2018.

"Yes, of course. That's what we're doing".

Mr Trump took another swing at his European allies saying they dealt unfairly with the United States over trade.

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