Oil holds gains as markets tighten amid OPEC cuts, Iran sanctions

Gladys Abbott
May 15, 2018

The memo, sent by the White House to the U.S. State Department, paves the way for U.S. efforts to curb Iranian oil exports after Washington's decision to pull out of the 2015 deal between Iran and six world powers curbing Tehran's nuclear program.

USA crude is trading at a hefty discount to Brent, the global marker, thanks to sharp rises in US production to 10.7 million barrels per day, which has left the American domestic oil market well supplied.

But it is unclear how hard the sanctions will hit Iran's oil industry.

Brent crude futures, the global benchmark for oil prices, were at $78.21 per barrel at 0639 GMT, virtually unchanged from their last close and not far off a three-and-a-half year high of $78.53 a barrel reached the previous session.

US crude futures climbed 26 cents, or 0.37%, to $70.96 a barrel on the New York Mercantile Exchange.

A almost 200% jump in oil prices over the past two-plus years could soon create a "particularly hostile environment" for global investors, Citibank economists warned Monday.

More news: Asteroid bigger than a football field will skim past Earth tomorrow

At the current price, Nigeria generates $33.0 per barrel as excess revenue, amounting to $75.9 million per day.At the current oil price, the excess crude oil account is expected to reach $76 million per day, about 16.2 per cent, up from $65.4 million recorded in April, 2018. Russia, which is the top producer, pumps about 11 million barrels a day.

With the USA drillers producing a record 10.7 million barrels a day, according to preliminary weekly data from the Energy Information Administration, the United States is approaching world's top producer Russian Federation, which pumps about 11 million barrels daily. Global markets have tightened as the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, has been withholding supplies since 2017 in order to push up oil prices.

"Major emerging economies' growth dynamics have thus far counterbalanced this soft spot, and global growth may recover in the remainder of the year due to U.S. fiscal stimulus and a rebound in OECD growth".

Referring to President Donald Trump's decision to withdraw from the Iran nuclear deal, OPEC said: "So far, the impact on the global economy has been minor and negligible, but the build-up of potentially disruptive concerns has increased". "However, after a period of a considerable growth, uncertainties seem to be on the rise", said the report.

The company's revenues increased "on the back of higher crude oil prices and optimization in sales channels despite the remaining constraints in production within the OPEC+ Agreement", it said on a statement issued on Monday. After the deal the production grew again and Iran had hoped to grow their output to around 4.7m barrels per day over the next four years.

Other reports by LeisureTravelAid

Discuss This Article

FOLLOW OUR NEWSPAPER