Oil nudges higher on Venezuela and Iran sanctions, OPEC cuts

The easing of a transportation bottleneck for low-cost US Permian Basin shale oil, could lead to higher US production. (AFP)
Updated 07 March 2019
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Oil nudges higher on Venezuela and Iran sanctions, OPEC cuts

  • Prices are being supported by efforts led by the OPEC and other countries to withhold around 1.2 million barrels per day
  • US sanctions against the oil industries of OPEC members Iran and Venezuela have also had an impact

SINGAPORE: Oil edged up on Thursday amid ongoing OPEC-led supply cuts and US sanctions against exporters Venezuela and Iran, but price gains were capped by record US crude output and rising commercial fuel inventories.
US West Texas Intermediate (WTI) crude oil futures were at $56.31 per barrel at 0637 GMT, up 9 cents, or 0.2 percent, from their last settlement.
Brent crude futures were at $66.22 per barrel, up 23 cents, or 0.4 percent.
Prices are being supported by efforts led by the Organization of the Petroleum Exporting Countries (OPEC) and other countries — a grouping known as ‘OPEC+’ — to withhold around 1.2 million barrels per day (bpd) of oil, a strategy aimed at tightening markets.
“In our view, OPEC’s strategy is to rebalance the market as quickly as possible and exit the cuts by the end of June in order to grow production alongside shale producers in the second half of this year,” US investment bank Goldman Sachs said in a note on Wednesday.
US sanctions against the oil industries of OPEC members Iran and Venezuela have also had an impact, traders said.
Venezuela’s state-run oil firm PDVSA this week declared a maritime emergency, citing trouble accessing tankers and personnel to export its oil amid the sanctions.
Despite these factors, oil remains in plentiful supply thanks to surging US production.
US crude oil stockpiles rose much more than expected last week, with inventories up by 7.1 million barrels to 452.93 million barrels, according to a weekly report by the US Energy Information Administration (EIA) on Wednesday.
“There was a surprisingly large stockbuild, which was bearish,” French bank Societe Generale said in a note following the EIA report.
Meanwhile US crude oil production remained at a record 12.1 million bpd, an increase of more than 2 million bpd since early 2018.
That, along with the easing of a transportation bottleneck for low-cost US Permian Basin shale oil, could lead to higher production, Goldman Sachs said.
“The balance between rising US production and the OPEC+ efforts to stabilize prices with a production cut was broken by higher than expected US inventories and the OECD warning of lower global growth impacting energy demand going forward,” said Alfonso Esparza, senior analyst at futures brokerage OANDA.
The Organization for Economic Co-Operation & Development (OECD) said on Wednesday the world economy would grow 3.3 percent in 2019, down 0.2 percentage points from the OECD’s last set of forecasts in November.


Iraq has enough oil capacity to meet customer needs: oil minister

Updated 25 April 2019
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Iraq has enough oil capacity to meet customer needs: oil minister

  • Thamer Ghadhban also says there are no acute oil shortages for the time being
  • but Iraq would continue to monitor the market to assess the need for additional supply

BAGHDAD: Iraq’s oil minister said on Thursday his country had the capacity to increase its oil production to 6 million barrels per day (bpd) if needed, but it was committed to OPEC-led output cuts and would not take unilateral action to boost supply.
Thamer Ghadhban also said there were no acute oil shortages for the time being, but Iraq would continue to monitor the market to assess the need for additional barrels at the next OPEC meeting.
On Monday, the United States decided not to renew exemptions from sanctions against Iran granted last year to buyers of Iranian oil, taking a tougher line than expected and triggering a rally in oil prices on fears of oil supply shortages.