Oil hits $80, highest since Nov 2014, on Iran concerns

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The IEA said global oil demand would average 99.2 million bpd in 2018.

China and India have committed to their oil purchase plans from Iran, but exports to South Korea may be affected due to the impact of pending USA sanctions on tanker transport, the head of the National Iranian Oil Company said Wednesday.

However, high oil prices could hit consumption, the International Energy Agency (EIA) warned on Wednesday, lowering its global oil-demand growth forecast for 2018 to 1.4-million from 1.5-million barrels per day (bpd). That data point is worth emphasizing: OPEC has claimed for more than a year that it was trying to erase the inventory surplus, and at least according to IEA data, that mission has now been accomplished.

"Continued declines could cut capacity by several hundred thousand barrels a day by the end of this year - just as the market feels the full impact of United States sanctions on Iran", the IEA warned.

Energy economist Phil Verleger says "we could be in store for the greatest market price disruption ever" and sees Brent possibly reaching $120 this summer.

"If there is a large shortfall in Iranian exports then clearly that will have an impact on a market that is already quite tight", he said. The country is the Iran's second-biggest buyer of crude after China.

OPEC is forecasting USA liquids production this year to increase by 1.5 million b/d, with 94% from tight crude and unconventional natural gas liquids, on increased investments and upgraded completion metrics, versus 90% in 2017.

OPEC thinks non-OPEC oil supply will grow at 1.72 million bpd year-on-year in 2018.

Elsewhere, supply concerns have been mounting over the last week after President Donald Trump pulled the United States of America out of the Iran nuclear deal - a move that reimposes sanctions on Iranian oil.

Global oil supply outside the cartel that makes up the Organization of the Petroleum Exporting Countries, i.e. OPEC, has recovered since contracting in 2016, but uncertainties remain about where the market may be headed through the rest of this year.

In Venezuela, meanwhile, the IEA noted that "the pace of decline of oil production is accelerating and by the end of this year output could have fallen by several hundred thousand barrels a day".

The U.S.' answer to high prices is to drill, baby, drill.

Early Wednesday morning, West Texas Intermediate crude for June delivery traded at $71.26 a barrel, down just five cents compared with Tuesday's closing price of $71.31.

As a result of its surging production, USA crude is increasingly appearing on global markets.

The International Energy Agency might see its "demand destruction", but only if it is caused by a geopolitical or weather premium spike.

Oil stocks were expected to drop further as peak summer driving season nears, offsetting increases in USA shale output, said analysts at Bernstein.

The push for higher oil prices has been, in large part, engineered by Saudi Arabia to pay for its domestic programs.

Oil is priced at $70.05 for WTI, Brent is selling for $78, and Basra Light is going for $74.46.

India received about 397,200 bpd of oil from Venezuela in April, the highest since September, up about 46.8 percent from a year ago, the data showed.