Oil prices experienced a boost on
Friday session after US President Donald Trump made remarks regarding
implementing sanctions on several Iranian entities. This remark has made
geopolitical tensions between the two countries.
According to reports, the
sanction on Iran can help oil edge up in 2017. Iran’s recent Tehran ballistic
missile test could lead to Trump reject Iran’s positive quarterly
certification, which is a requirement for the continued waiver of US
congressional energy sanctions.
If Iran, third largest oil
producer among OPEC members, will receive such sanction, this could lead to
removal of Iranian oil from the market and potentially reduce supply which
could eventually lead to price surges.
Brent crude futures were up by 45
cents, or 0.08%, to $57.01 per barrel on early Friday session. March futures
climbed 0.6% to $53.88 a barrel or $0.43 increase in the Globex electronic
session. Meanwhile, US West Texas Intermediate climbed $0.29, or 0.5%, to
$53.83 per barrel. On Tuesday, US crude futures were down to as much as $0.34.
The Organization of the Petroleum
Exporting Countries and several other major oil-producing countries agreed last
November to cut oil output which began on January 1. OPEC members were required
to cut 1.8 million bpd, while non-members were to cut 558,000 bpd.
A review of the output cut is set
to take place in 6 months on June in order to assess the effectiveness of the
deal.
Russia, included on the OPEC
output cut, stated recently that Russian oil companies may cut their oil
production faster than the original agreement.
Although OPEC members are seen to
comply with the said agreement, the price of oil is still not trading above
$60, the desired price reach for the energy. This was due to the unexpected
rising of US oil inventories recently.
“The upward pressure on oil
prices has been partly offset by rising US production since October last year,
which is expected to continue for the rest of 2017,” said the National
Australia Bank.
According to the Energy
Information Administration’s forecast, they believe that it is highly likely
for US inventories to increase from an average of 8.9 million barrels per day
in 2016 to 9.3 million barrels per day in 2018.
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Oil prices climbs amid US Iranian sanctions
Reviewed by Trade12 Reviews
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Reviewed by Trade12 Reviews
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