Published: Tue, May 15, 2018
Business | By Kate Woods

Excess crude account swells as oil price leaps towards $80

Price is another matter", he said."Iran, which is one of the main sour crude suppliers of the Mediterranean basis, provide Saras with crude.

It was a busy week for oil traders, with prices moving in a $4.25 range of $71.89 per barrel down to $67.63 per barrel as the market digested the news that U.S. President Donald Trump chose to unilaterally pull out of the Iran nuclear deal and reimplement economic sanctions.

"Our view is unchanged: Trump will reimpose oil sanctions", he said Tuesday.

Pouyanné told the Financial Times at the time that he remained "fully committed" to the project but said Total had "several ways to exit" if sanctions were reimposed.

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In China, the biggest single buyer of Iranian oil, Shanghai crude futures hit their strongest in dollar terms since they were launched in late May, around $73.20 per barrel.

US West Texas Intermediate (WTI) crude futures were up $1.51 per barrel, or 2.2 percent, at $70.57 a barrel, near highs also last seen in late 2014. Crude oil inventories (-2.2m vs. -1.0m expected) were lower than expectations. Despite these efforts to fill in for lost supply, analysts at Bank of America still expect oil to reach $100 per barrel in 2019.

Despite the International Atomic Energy Agency verifying Iran's adherence to the agreement, numerous reports anticipated Trump would not waive sanctions, plunging Iran's cautious re-entrance to the energy market into deep uncertainty, along with global prices carefully monitored by the Organization of the Petroleum Exporting Countries (OPEC), of which Iran is a member.

"Whatever extraneous factor that affects supply or demand, will no doubt send the market into disequilibrium, which is not in the interest of producers, or the interest of consumers", he said. The deal to keep 1.8 million barrels a day off the market is set to last through the end of the year.

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US President Donald Trump directed his Secretaries of State, Energy, and the Treasury to significantly reduce the amount of petroleum and petroleum products bought from Iran, according to a memorandum released by the White House on Monday.

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

Italian refiner Saras said Monday it will continue to buy Iranian crude for now despite United States sanctions, but the company's CEO said he expected oil trade with Iran to become "increasingly difficult" and expressed concern on the significant rise in oil prices.

"Coupled with the ongoing plunge in Venezuelan production, the price environment has turned decidedly bullish, despite headwinds like dollar strength and soaring US production", Platts Oil Futures Editor Geoffrey Craig said in an emailed market report.

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