Saudi and OPEC to Continue Withholding Oil Production Beyond June?

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Crude futures are up about 40% this year on markets tightened by an OPEC provide pact, sanctions on Venezuela and Iran in addition to unreliable manufacturing in Libya. WTI crude futures fell by $1.05 to $64.16.

The bank said it expected crude markets to climb until the third quarter of 2019, adding that prices would then "start to become vulnerable to a sharp rise in U.S. exports of light crude thanks to pipeline and terminal capacity expansion".

The oil producers meet on June 25-26 to decide whether to extend the pact or adjust supply targets.

"The elimination of USA waivers for Iran will take another 0.5-1 million barrels per day from the oil market", said Frank Schallenberger, head of commodity research at LBBW.

Brent crude futures hit a session high of $73.27 per barrel and settled 76 cents, or 1.1 percent, higher at $72.80. The country's currency, the rial, hit record lows past year, losing more than 60 per cent of its value against the United States dollar, and the government had to authorise the central bank to intervene in the foreign exchange market in defence of its currency in October.

JBC cited price assessments from Argus that premiums for Australian heavy, sweet grades Pyrenees and Van Gogh versus North Sea dated rose by $2 per barrel to a record $9 per barrel.

Wealthy Gulf Arab oil exporters face their own sets of challenges, namely diversifying their economies away from reliance on oil exports for revenue in the face of sharp ebbs and flows in prices over the past six months.

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He added that he had "no idea how the world energy market is going to react" to the toughening of sanctions against Iran.

Price offerings for several Angolan streams, an approximate alternative to Iranian and Venezuelan crude, were at their highest ever, traders said.

Some of Sonangol's regular customers balked at the mark-ups, prompting the company to offer the crude to other buyers instead as spot cargoes. The U.S. withdrawal of waivers on Iranian oil exports is likely to further impact this figure.

China's foreign ministry this week said Beijing had formally complained to the United States about the move.

U.S. sanctions on Iran, rising unrest in the Middle East and North Africa and oil price volatility are dragging regional economic growth, the International Monetary Fund said Monday.

Bjarne Schieldrop, chief commodities analyst at SEB, said Tuesday, "We think that China can't and won't back down this time and we could easily see an increase of Chinese oil imports from Iran up towards maybe 1 million bpd".