Oil prices chart new territory on supply-side concerns

Marcus Newton
July 5, 2018

The cabinet stressed that one of the most important objectives of the kingdom's petroleum policy is to always seek to achieve balance and stability in oil markets, as well as to coordinate and consult with other producing countries and major consuming countries.

Hook said that the first part of United States sanctions against Iran will snap back on August 6.

The Wall Street Journal in turn cited a high-ranking Saudi official as saying that Riyadh made no concrete promises to Trump but assured him of its ability to satisfy the market's demands.

A survey of analyst expectations from S&P Global Platts revealed expectations of a drain on USA crude oil inventories of 4.5 million barrels last week, adding support to the concerns about a market deficit.

Iran's President Hassan Rouhani on Tuesday said it was "unwise to imagine that some day all producer countries will be able to export their surplus oil and Iran will not be able to export its oil".

If Mr Trump's tweets are taken as policy, it means the U.S. is assuming a 2 million barrel-a-day increase is readily available from the Saudis, a relationship that has already been leveraged "to the maximum extent". While the comments were ambiguous, Iranian officials in the past have threatened to block the Strait of Hormuz, a major oil shipping route, in retaliation for any hostile USA action.

An agency report on Tuesday indicated, however, that despite the United States push on Saudi Arabia, futures in NY jumped as much as 1.7 per cent.

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On Saturday, President Trump touted an agreement with Saudi King Salman bin Abdul Aziz to vastly increase oil production in an effort to lower prices.

Iran is among the nations with the highest oil serves, along with Saudi Arabia, which is the world's leading exporter of oil.

Looming US sanctions against Iran further contribute to expected tightness.

The debate at this time is how to compensate for disruptions in Libya, Venezuela and Iran. Global benchmark Brent fell 2.4 percent in the session, changing direction from last week when it gained more than 5 percent.

"In an ideal world an increase in global or regional oil production would have downward pressure on prices".

Despite the relief from Saudi Arabia and Russian Federation, oil markets remain tense because of unplanned outages from Canada to Venezuela and Libya. "We are also working with oil market participants, including producers and consumers, to ensure market stability".

"Yes, of course. That's what we're doing".

Other reports by MaliBehiribAe

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