Published: Sat, May 12, 2018
Money | By Ralph Mccoy

Return of Iran sanctions fires up oil prices

Return of Iran sanctions fires up oil prices

Oil prices steadied near 3-1/2 year highs on Friday as the prospect of new US sanctions on Iran tightened the outlook for Middle East supply at a time when global crude production is only just keeping pace with rising demand.

Oil markets have been surging in recent days because of President Trump's plans to reimpose sanctions on the country, which produces 3.9 million barrels a day, or about 4 per cent of the world's supplies.

"China is the largest commodity producer in the world and the largest commodity consumer in the world, so it would make sense that Chinese futures that are close to the areas of supply and demand would be a more natural benchmark than the US markets", said Marwan Younes, founder and chief investment officer of Massar Capital Management in NY.

U.S. crude inventories C-STK-T-EIA fell by 2.2 million barrels in the week to May 4, to 433.76 million barrels, according to the Energy Information Administration (EIA), slightly above the 420 million barrels five-year average level. U.S. West Texas Intermediate (WTI) crude futures rose $2.08 to settle at $71.14 a barrel, a 3-percent gain. Brent crude futures, the global benchmark for oil prices, hit their strongest since November 2014 at $77.76 per barrel on Thursday.

Net U.S. crude imports fell last week by 955,000 barrels per day to 5.4 million bpd, the lowest since mid-February, the EIA data showed.

The EIA report helped lift USA gasoline futures to $2.1674 a gallon, the highest since Hurricane Harvey sent prices surging in August. Goldman Sachs said the planned unilateral USA sanctions against Iran would likely have a "high level of efficiency".

"A whopping drop in imports has resulted in a moderate draw to crude stocks, while a drop in both gasoline and distillates inventories round out a broadly supportive report", said Matt Smith, director of commodity research at ClipperData.

Spotify Removes R. Kelly From Its Playlists After Sexual Misconduct Allegations
The r&b singer has been accused of sexual violence over the years by multiple women , allegations he's repeatedly denied. Kelly's music came as the company debuted a new policy regarding "hate content and hateful conduct".

South West tragedy: Up to seven dead in overnight horror
Officers have no concerns about wider public safety, he said, and police are trying to contact the victims' relatives. Police located seven persons deceased. "It's not appropriate for me to speculate on any further matters", he said.

Departing Barcelona captain Andres Iniesta: I'll decide in next 10 days
But Australia's chances of snaring such a big fish with FFA's modest new $3 million war chest appear slim. O'Rourke said if a move for Iniesta was unsuccessful, other targets would be drawn up.

The Opec has a deal with Russian Federation and non-opec producers to cut supplies that has helped erase a global glut and boosted oil prices to their highest since 2014.

Oil prices clocked up more multi-year highs on Thursday as traders adjusted to the prospects of renewed United States sanctions against major crude exporter Iran amid an already tightening market. The effects may be muted as major Asian importers, China chief among them, are likely to continue buying Iranian oil.

There is a risk of crude oil prices hitting $100 per barrel next year due to tightening of supply and demand balance in global oil market, investment banking giant Bank of America Merrill Lynch said in a report Thursday.

There are signs, however, that other members of the Organization of the Petroleum Exporting Countries (OPEC) will raise output to counter the Iran disruption. Hundreds of thousands of Iranian oil barrels could be on the line with the US departure from the JCPOA, though European leaders have said they remain committed.

A number of countries have already cut reliance on Iranian oil, as well as other "traditional" sources of supply, due to a surge in cheaper USA crude exports.

Oil pumps are seen at sunset outside Vaudoy-en-Brie, near Paris, France April 23, 2018.

Like this: