Oil price rises as markets tighten ahead of Iran sanctions

Oil price rises as markets tighten ahead of Iran sanctions

Oil price rises as markets tighten ahead of Iran sanctions

The physical Dubai crude market structure also strengthened to a multi-year high recently, with the spread between front-month cash Dubai and same-month Dubai swap at $1.44/b on Friday in Singapore, the highest since May 21, 2014 when it stood at $1.53/b.

The Organization of the Petroleum Exporting Countries and non-OPEC states, including top producer Russian Federation, gathered in Algiers on Sunday for a meeting that ended with no formal recommendation for any additional supply boost to counter falling supply from Iran.

Delegates from major oil-producing nations have agreed to continue working to boost output.

Even though several European countries have said they are seeking to protect their companies from renewed US sanctions against Tehran, several major companies such as Total announced they were suspending activities in Iran.

He said: "We are on the verge of some significant volatility in Q4 2018 because depending on the severity and duration of the Iranian sanctions, the market simply does not have an adequate supply response for a 2 million barrel a day disappearance of oil from the markets".

Oman's oil minister Mohammed bin Hamad Al-Rumhy told reporters on Saturday that OPEC and non-OPEC producers overachieved on pledged output cuts by 600,000 bpd in August, putting the reduction at around 2.4 million bpd.

Analysts claim that the most probable course of action for OPEC this weekend is to reaffirm its current policy, seeking a slight increase in production, to return to its goal of cutting production by 1.8 million barrels per day.

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Oil reached $80 per barrel this month causing Trump to tweet on Thursday: "We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices!". Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

"Given the numbers we saw today, that [an output increase in 2019] is highly unlikely unless we have surprises on the supply and demand", Falih said, Reuters reported.

When asked about Trump's repeated accusation (most of them delivered via Twitter) that OPEC was pushing crude prices higher, al Falih replied, "That is of course not true; we have been looking at more important aspects, which is adequacy of supply".

"We don't believe OPEC can actually raise output significantly in the near term, as the physical spare capacity in the system is not that high". Once the elections are over, the United States administration may be willing to bear a higher oil price.

For all these urgent supply pressures, the world's largest oil producers adopted a sit-back-and-wait approach at their meeting in the Algerian capital on Sunday.

Oil prices rose on Monday as USA markets tightened just weeks ahead of Washington's plan to impose new sanctions against Iran.

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