Oil prices stumble, but Iran sanction fears limit losses

Oil prices stumble, but Iran sanction fears limit losses

Troy Powers
May 2, 2018

Trump will decide by May 12 whether to restore US sanctions on Tehran, which would likely result in a reduction of its oil exports. Futures for September delivery had risen 0.6% to 444.2 yuan per barrel on Friday, gaining 5.7% this month. French President Emmanuel Macron's prediction that the U.S. will pull out of the nuclear deal has boosted speculation over reduced shipments from the Islamic Republic.

Helping to limit losses are a number of factors including a reported drop in Angola production, continued threats by Houthis to Saudi oil and shipping and infrastructure, but most of all the possibility of the reimposition of sanctions against Iran.

A rise in United States government borrowing costs to their highest since 2013 this week, has tempered some investor appetite for risk, but analysts said Brent crude futures, the global benchmark, may yet rise toward new 2018 peaks above $75 a barrel.

Netanyahu's disclosure of thousands of documents he said proved Iran definitively sought to assemble nuclear bombs comes as the US President, Donald Trump, considers whether to re-impose sanctions against Iran, the third biggest oil producer in the Organisation of Petroleum Exporting Countries.

OPEC and its partners agreed to cut oil output by 1.8 million barrels per day since January a year ago, an effort which has recorded a 149 percent success, and has boosted prices to $74 per barrel as at Thursday.

Global oil benchmark, Brent crude, on Monday hit $75 per barrel and rose further amid growing geopolitical tensions in the world.

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Trading on the Shanghai International Energy Exchange is closed for a Chinese public holiday.

A measure of oil market volatility climbed to the highest level in two weeks.

Concerns that the USA may reimpose sanctions on Iran helped underpin the markets this week as this represents a threat to supply.

"It's only Trump who wants to back out of the deal, but he wants to back out of so many deals ..." At the same time, OPEC's production cuts have continued to tighten global markets, despite US crude output hitting fresh records and the number of rigs reaching the highest levels since 2015.

While multiple June loading Nigerian cargoes had changed hands, traders said most of these were not yet promised to end users, meaning they could be re-offered. The rig fleet has expanded throughout the entire month of April, adding a total 28 units. US crude oil inventories rose by 2.2 million barrels (MMBbl) in the week ended April 20, to 429.74 MMBbl. However, a bigger than expected jump in USA inventories sent crude oil futures...