Wednesday, April 24, 2019
Home Business Oil is rising to a four-year high as producers oppose an increase...

Oil is rising to a four-year high as producers oppose an increase in production to offset Iran's sanctions

SINGAPORE (Reuters) – Brent's oil benchmark rose on Tuesday for a second day and stayed within reach of a four-year high during the last session.

A horizontal drilling rig on a lease of Petersley Energy in the Permian Basin near Midland, Texas USA August 23, 2018. REUTERS / Nick Oxford / File Photo

The impending US sanctions against Iran and the unwillingness or inability of the Organization of the Petroleum Exporting Countries (OPEC) and Russia's leading oil producer to increase production to offset the loss of Iran's supply have pushed prices higher.

Brent Crude LCOc1 futures stood at $ 81.42 a barrel at 0315 GMT, down 22 cents or 0.3 percent, and close to the intraday high reached the day before $ 81.48, the highest since November 2014.

The West Texas Intermediate (WTI) Crude Oil CLc1 was $ 72.26 a barrel, an increase of 28 cents, or 0.3 percent, from the last settlement.

The United States will begin sanctions on Iran's oil exports from 4 November, and Washington is pressuring governments and businesses around the world to adjust to Tehran.

"Iran will lose considerable export volumes, and given the restraint of OPEC +, the market will be ill-equipped to fill the supply gap," said Harry Tchilinguirian, Global Head of Commodity Markets Strategy at French bank BNP Paribas to Reuters Global Oil Forum Tuesday.

OPEC + is the name given to the group of oil producers, including Russia, who have agreed to restrict production from 2017 onwards.

While Britain, China, France, Germany, Russia and Iran declared on Tuesday they were determined to develop payment mechanisms to continue to operate despite sanctions by the US, most analysts expect Washington's actions to range from 1 million to 1, 5 million barrels per day bpd) Crude deliveries from the markets.

WILL OPEC ACT?

US President Donald Trump has called for OPEC and Russia to increase their supplies to offset the expected decline in Iranian exports. Iran is the third largest producer in OPEC.

However, OPEC and Russia have so far rejected such calls.

"A formal decision on producer group oil production will not take place until December unless an extraordinary meeting is held, so the period during which oil prices can potentially increase profits is quite large as Iran loses exports and OPEC + on standby Mode remains, "Tchilinguirian said.

Ashley Kelty, oil analyst at financial services firm Cantor Fitzgerald, said crude oil could soon reach $ 90 a barrel.

"We do not believe that OPEC can significantly increase production in the near future, as the physical reserve capacity in the system is not that high," Kelty said.

Bank of America Merrill Lynch has raised its average Brent price forecast for 2019 from $ 75 per barrel to $ 80, while increasing its WTI crude forecast for 2019 by $ 2 to $ 71 per barrel.

The bank said that "the Iran factor could dominate the market in the short term and cause a (crude oil) spike," although he added that concerns about demand in emerging markets could thereafter recur.

Indian refineries – fighting high crude oil prices and a moving rupee – plan to reduce oil imports, which may be a first sign that high prices are beginning to weigh on demand.

And despite tense market prospects for the coming months, some traders said that more oil would hit the markets in 2019.

Commodity trading giant Vitol said Tuesday that non-OPEC producers, particularly the US, could launch up to 2 million barrels of crude oil in 2019.

Reporting by Henning Gloystein; Cut by Richard Pullin and Christian Schmollinger

Our standards:The Thomson Reuters Trust Principles.

,

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Must Read

What comic fans know about Adam Warlock, you do not know

When Warlock takes possession of the Infinity Gems at the end of the year Infinity GauntletHe tries to be more responsible than his previous...

Elton Musk says Tesla wants to develop an 'electric leaf blower'

Tesla CEO Elon Musk is planning to develop a new creation - only this time, it will not be rolling on four...

Japan releases an epic video of the seconds before its spaceship bombards an asteroid

We now know what it looks like when a spaceship bombards an asteroid with a bomb.In early April, the Japan Aerospace Exploration Agency (JAXA)...

At least 156 people in 10 states became infected with E. coli related to ground beef, says CDC

ATLANTA - Investigators believe beef may be responsible for 156 people in 10 states that have signed up with E. coli since March 1,...