Trump calls Saudi's King to discuss oil supplies

03 October, 2018, 16:40 | Author: Eric Barnett
  • Markets are edgy that an embargo on Iranian crude exports will be harsher than before and wreak havoc on markets. ─ Reuters  File

Brent crude, the worldwide oil benchmark, surged on Friday to a fresh 4-year high above $83/bbl as the market braces for the impact of the US energy sanctions on Iran.

The global crude oil benchmark lost 37c to $84.61 a barrel by 12pm GMT after reaching a new four-year high of $85.45 in the previous session.

US West Texas Intermediate (WTI) crude futures CLc1 marked $75.90 a barrel around 0630 GMT on Tuesday, their strongest since November 2014.

Oil headed for its longest string of quarterly gains in more than a decade as impending supply disruptions threaten to fracture a global market with little margin for error.

Trump has been increasing the pressure on the Organization of the Petroleum Exporting Countries, saying it's pushing oil prices too high.

Fund managers have raised their net in Brent by 172 million barrels since August 21 compared with an increase of just 5 million in WTI.

Jubril Kareem‏, an oil and gas expert in a tweet on Monday, said, "Oil at $85/barrel".


According to OPEC, the crude oil market is well supplied now and there is not any need for further production increase. Still, oil majors like BP Plc and Total SA cautioned that such a rally may not be sustainable as escalating trade tensions between the USA and China may weaken demand.

Estimates vary widely on how much Iranian crude US sanctions could remove from the market, from 500,000 barrels per day (bpd) to 2 million bpd.

"If you look at the prices charged by OPEC for Eastern Asia and Europe and U.S., they are different".

The capacity of the giant Khurais oil field will be expanded by between 250,000 bpd and 300,000 bpd, to reach 1.5 million bpd, said the report. Other countries that produce oil have increased output in recent months to meet growing demand, but supply still remains tight. With top traders seeing oil above $100 , speculation there may not be enough spare capacity is keeping investors nervous before American sanctions on Iran kick in next month. It also reported a build of 1.53 million barrels in total gasoline inventories, while the market was expecting a draw of 100,000 barrels. Working oil rigs dropped by three to 863 last week, according to Baker Hughes data Friday. The companies need to find ways to export more of the USA light-sweet crude oil. The bullish breakout can lead oil prices towards $74.30.

WTI is up by about 17 percent since mid-August. "Worries about trade relations affecting economic growth have fallen away".

In the oil market, balance is a hard game.

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