Oil price nears $80

15 May, 2018, 22:42 | Author: Kathy Ellis
  • OPEC Adds US Exit From Iran Nuclear Deal To 'Disruptive Concerns'

How much higher oil prices can go depends on several factors, many linked to supplies in the aftermath of the USA leaving the Iran nuclear deal, according to analysts.

USA light crude was 26 cents lower at $70.69 a barrel, also not far off its highest since November 2014.

Iran's oil buyers continue to buy its crude, assessing the implications of the sanctions during the 180-day wind-down period.

- Oil prices are at four-year highs, raising the price of producing gasoline.

Elsewhere, supply concerns have been mounting over the last week after President Donald Trump the U.S. pulled out of the Iran nuclear deal - a move that reimposes sanctions on Iranian barrels.

With Japan and South Korea already indicating that they will aim to attain a waiver from the United States in order to continue buying Iranian crude, the impact of Trump's actions will rest on how far he goes in comparison with Obama's previous sanctions.

If Descalzi's predictions proved true, this could presumably persuade Mazroui to reverse course and oblige OPEC members to pump more in order to compensate for Iran, instead of maintaining the cutbacks.

South Korea imported 1.24 million tonnes of Iranian crude, or 303,025 barrels per day (bpd), in April, down from 1.41 million tonnes from previous year, according to the customs data.

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But so much is unknown about how the Trump administration will review those requests, especially at a time of rising oil prices going into the peak summer driving season in the US.

Michael Wittner, analyst at Societe Generale, forecasts USA sanctions will remove 400,000 to 500,000 bpd of Iranian crude from the global market.

The oil group also lifted its 2018 forecast for production growth outside of OPEC and now sees it expanding by 1.72 million bpd, up from a prior view of 1.71 bpd, with the USA accounting for 89% of the 1.72 million bpd increase.

The tightening market has just about solved the global supply overhang that has weighed down oil prices between 2014 and 2017.

Among U.S. shale producers, Oasis Petroleum (OAS) shares rose 0.6%, in buy range after breaking out of a cup base with a 11.49 entry point and Carrizo Oil & Gas (CRZO) rallied 1.2%, also in buy range after breaking out of a cup base with a 25.20 buy point.

LaForge, from Wells Fargo Institute, says the supply-demand balance in the oil market is already shifting toward oversupply, given that growth in demand is limited by an economic expansion that at least in the U.S.is in its later stages.

Iran now provides approximately 4 percent of global crude supplies and is the third-biggest manufacturer in the OPEC.



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