Possibility of Iran Spring pushes oil prices northwards

03 January, 2018, 01:54 | Author: Diane Mills
  • Above pump jacks on the Bakken shale formation in North Dakota. A surprising result of the bearish energy market in 2017 US shale’s bid to take up market share by boosting production. Robyn Beck  AFP

Prices in global oil markets are supported by OPEC production cuts which started in January 2017 and will continue through this year.

Brent Crude futures rose 41c to 66.57 bbl.

In the week ended December 29, 2017, USA crude oil inventories are expected to fall below 425 MMbbls (million barrels) for a further upside in oil prices.

Iran's crude oil production and exports have not been impacted by the unrest spreading across the country, Iranian oil and shipping sources said on Tuesday, as a crackdown intensified against anti-government demonstrations that began last week.

Oil prices rebounded in mid-morning trade on Thursday, having earlier sunk after the International Energy Agency increased its forecast for USA oil output growth in 2018, raising the prospect of excess supply.

U.S. West Texas Intermediate (WTI) crude futures settled at $60.42, the highest close since June 2015.

A possible rise in U.S. oil production may pose a threat to higher oil prices.

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Iran, OPEC's third-biggest oil producer, pumps around 3.8 million barrels per day.

Russian Energy Minister Alexander Novak has said that 2018 oil production is expected to stay at 547 million tonnes if the cuts last until the end of the year, as agreed.

Brent crude prices were up 0.22 per cent at $67.02 per barrel this morning after hitting $67.27 earlier in the day, a high not seen since May 2015.

Protesters also attacked police stations elsewhere in Iran late into the night on Monday, news agency and social media reports said.

Oil markets have been supported by a year of production cuts and strong demand from China. Inventories are down by nearly 20% from historic highs last March, and well below this time in Y 2016 or in Y 2015.

Only rising US production, which is on the verge of breaking through 10 million bpd, is weighing on the price outlook for 2018.

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