Oil prices rise on Iran sanctions worries, decline in Venezuelan output

Traders said markets climbed on expectations that the US will in May re-impose sanctions against Iran, a major oil producer and OPEC member. (Reuters)
Updated 26 April 2018
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Oil prices rise on Iran sanctions worries, decline in Venezuelan output

SINGAPORE: Oil prices rose on Thursday, supported by expectations the United States will re-impose sanctions against Iran, a decline in output in Venezuela and ongoing strong demand.
Brent crude oil futures were at 74.27 per barrel at 0643 GMT, up 27 cents, or 0.4 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were up 14 cents, or 0.2 percent, at $68.19 per barrel.
Traders said markets climbed on expectations that the United States will in May re-impose sanctions against Iran, a major oil producer and member of the Organization of the Petroleum Exporting Countries (OPEC).
French President Emmanuel Macron said on Wednesday that he expected US President Donald Trump to pull out of a deal with Iran reached in 2015, in which Iran suspended its nuclear program in return for western powers lifting crippling sanctions.
Trump will decide by May 12 whether to restore US sanctions on Tehran, which would likely result in a reduction of its oil exports.
Further pushing oil prices has been declining output in Venezuela, OPEC’s biggest producer in Latin America.
Venezuela’s crude production has fallen from almost 2.5 million barrels per day (bpd) in early 2016 to around 1.5 million bpd due to political and economic turmoil.
US oil major Chevron Corp. has evacuated executives from Venezuela after two of its workers were imprisoned over a contract dispute with state-owned oil company PDVSA.
Venezuela’s plunging output and looming US sanctions against Iran come against a backdrop of strong demand, especially in Asia, the world’s biggest oil consuming region.
However, not all market indicators point toward tighter supplies.
US crude oil inventories rose by 2.2 million barrels in the week to April 20, to 429.74 million barrels. That’s almost 10 million barrels above the five-year average.
US crude production climbed by 46,000 barrels per day (bpd) on the previous week, to 10.59 bpd. That’s an increase of more than a quarter since mid-2016.
American crude oil output has overtaken that of top exporter Saudi Arabia. Only Russia currently produces more, at around 11 million bpd.
The soaring US output has made WTI crude around $6 per barrel cheaper than Brent, the international benchmark for oil prices.
Dutch bank ING said “the wide discount for WTI to Brent saw exports rising 582,000 bpd week-on-week to a record high of 2.33 million bpd.”
With US output and exports surging, some analysts warn that the 20-percent climb in Brent prices since February is starting to look overdone.
“The market does look a little toppish,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.


Jair Bolsonaro uses WEF platform to sell a ‘new Brazil’ to Davos elite

Updated 47 min 6 sec ago
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Jair Bolsonaro uses WEF platform to sell a ‘new Brazil’ to Davos elite

DAVOS, Switzerland: Brazil’s new president, Jair Bolsonaro, threw out the welcome mat for big business and major investors on Tuesday, telling a summit of CEOs at the World Economic Forum in Davos that his government would make the country one of the top 50 in which to do business.
Bolsonaro said he would work to open up Brazil’s relatively closed economy, reduce and simplify taxes, privatise assets and give his new justice minister the tools to tackle corruption and organized crime.
The newly-elected Brazilian president told the audience that he was “moved and honored” to be addressing the good and the great at Davos, calling the forum an opportunity to show the world a revamped Brazil that he was building.
“I want to introduce to all of you the new Brazil we are building,” he said. “We are committed to changing our history.”
He reassured political and business leaders in attendance that his government has the credibility and the tools required to reform his country.
Big investment to turn Brazil into a global tourist destination was the main thrust of Bolsonaro’s speech. But given the importance placed on climate change and protecting the natural world, he was keen to point out that he would strive to preserve the environment while developing the economy — saying policies on the two “should go hand-in-hand.”
Bolsonaro surfed a populist wave last year to ride to power, vowing an end to rampant corruption and a restoration of law and order in Brazil.
But staging his first foreign trip as president, Bolsonaro has left behind a scandal about suspicious payments involving his politician son Flavio Bolsonaro, who denies any wrongdoing.
Focusing instead on a pro-business message at the WEF, Bolsonaro told his well-heeled audience that he was determined to open up Brazil’s economy.