Saturday, 20 July, 2019

Oil prices rise after Trump pulls out of Iran deal

The US could impose sanctions on Iran which has ramped up oil production in recent years The US could impose sanctions on Iran which has ramped up oil production in recent years Todd Korol Reuters
Ginger Lawrence | 13 May, 2018, 07:22

At least one analyst has downplayed the importance of crude to the overall economy.

Brent crude oil futures were at $75.57 per barrel at 12.20pm, up 70 cents, or 0.9%, from their last close.

The oil price rose on Thursday and was set for its largest weekly increase in a month, as the market prepared for potential disruption to crude flows from major exporter Iran in the face of U.S. sanctions.

Trump on Tuesday announced that the USA was withdrawing from the Iran nuclear deal signed by the Obama administration in 2015 under which Tehran had agreed to limit its sensitive nuclear activities and allow in global inspectors in return for the lifting of crippling economic sanctions.

Commodity pricing group S&P Global Platts, however, said it was anticipating a 500,000 barrel draw in USA commercial crude oil levels and was seeing the trend line supportive of higher crude oil prices.

Analysts have also pointed out that rising gas prices could deplete money saved by the average American due to the tax overhaul bill passed late past year by Trump and Republicans in Congress.

Boeing Chief Executive Dennis Muilenburg said last month the airplane manufacturer has no Iranian deliveries scheduled this year.

Eventually fuel prices show up in the costs of all sorts of consumer goods that are hauled by plane, train or truck.

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"Regardless, his foreign policy continues to ignite tensions in the main oil-exporting center and is, thus, price supportive", they said.

The US Treasury has said that there will be wind-down periods of 90 and 180 days before sanctions are implemented. Longtime energy economist Philip Verleger believes the run-up is enough to trim growth "because consumers are going to have to cut expenditures on stuff other than gasoline".

"Higher prices are more than likely to be capped as". The figure was also lower than that of January this year, which stood at 1.61 million barrels per day.

Even without disruption to Iran's crude flows, the balance between supply and demand in the oil market has been tightening steadily, especially in Asia, with top exporter Saudi Arabia and No.1 producer Russian Federation having led efforts since 2017 to cap output to prop up prices.

In an interview with CNN, said the foreign Minister of Saudi Arabia Abdel al-Jubeir. USA oil firm ConocoPhilips has moved to take the Caribbean assets of Venezuela's state-run PDVSA to enforce a $2 billion arbitration award, actions that could further impair PDVSA's declining oil production and exports. Throw in a proposal by a United Nations agency that wants ships to use less high-sulfur fuel, and he thinks oil might hit $200 — a level never seen — by the end of 2019.

Each company and bank will have to decide whether to risk being cut off from the US financial system.

Meanwhile, U.S. crude oil output is expected to rise by 1.14 million bpd to 11.86 million bpd next year, the U.S. Energy Information Administration said. Additionally, the move could also cause crude oil supply disruptions at a time when supplies are tightening. Global oil demand was 97-98 million BPD.