Oil Remains Upbeat as Brent Crude Trades $77.07

Sean Reid
May 15, 2018

"Finding new investment to fund crude oil development projects in Iran has been a challenge and the imposition of new USA sanctions is likely to cut demand for Iranian crude, thereby limiting the market for production from new developments".

Brent crude futures LCOc1, 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. West Texas Intermediate was up 0.86% to $71.89 a barrel.

"We expect that after the OPEC+ agreement expires by the end of 2018, it could take up to five years for its oil production to return to 2016 levels, which will in turn constrain overall GDP growth relative to historical trends", its report read. This is a sign that bulls are not trading with as much conviction as we saw following Trump's Iran decision.

Both forecasts top Friday's $70.70 close in USA crude oil prices, which trade at a roughly $5 to $6 discount to Brent crude.

Futures for September delivery rose 1.6% to 472.8 yuan a barrel on the Shanghai International Energy Exchange. The contract fell 1.2% on Monday.

US drillers added 10 oil rigs in the week to May 11, bringing the total to 844, the highest level since March 2015, energy services firm Baker Hughes said on Friday. He serves this year as the group's president. Foreign ministers from the UK, France and Germany will meet with their Iranian counterpart, Javad Zarif, to discuss salvaging an accord that allows Iranian oil exports, after the United States withdrew last week. The two parties didn't disclose whether the world's biggest crude importer will scale back purchases in light of the renewed sanctions.

Sputnik reported that get ready for a spike in oil prices up to $100 a barrel - a level not seen since 2014 - in 2019, Bank of America Merrill Lynch analysts forecast. While European buyers flag concerns over the financing issues of trade with Iran as a potential stop to buying Iranian crude, China is reassuring Tehran that it will continue to import its oil.

Russia's largest oil producer, in which British oil major BP owns a 19.75 stake, said production of liquid hydrocarbons, or oil and gas condensate, stood at 4.57 million barrels per day (bpd) in the first three months of 2018. Prices at the pump jumped 6 cents nationwide last week.

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