Even though U.S. President Donald Trump has yet to announce whether he'll pull out of the 2015 Iranian nuclear deal as a May 12 deadline nears, American officials already are positioning for post-accord negotiations.
"The breakout $70 a barrel is not a fluke", he said.
Trump's decision could limit the estimated 1 million barrels of Iranian oil flowing in a market that has little room for a shortage, even if Iranian clients cut off imports completely.
Iran's deputy oil minister for global and commercial affairs, Amir Hossein Zamaninia, elaborated on Iran's view on the market after Oil Minister Bijan Namdar Zanganeh earlier in the day said the country supports "reasonable" prices and is not an advocate of costlier crude.
"It seems that the bureaucratic wheels are turning in Washington to prepare for a sanctions snapback", RBC Capital Markets analyst Helima Croft said in a note, adding that "the extraterritorial nature of USA sanctions, which cover energy, shipbuilding, finance, trade, insurance, etc., means that.Iran's oil exports could credibly be curtailed by 200,000-300,000 bpd".
If you look at OPEC, compliance is the best it has ever been.
Saudi Arabia is the OPEC member that wants higher prices as it prepares for the listing of state oil giant Aramco. According to a Reuters report, the current backwardation in Brent is the most extreme it has been in more than 25 years, putting it in the 91st percentile of all trading days since 1992.
In April, the biggest decrease in supply came from Venezuela, where the oil industry is starved of funds because of economic crisis. Global demand for oil has been stronger than expected due to the growing world economy. Like I said before, this is not your daddy's OPEC.
USA oil firm ConocoPhillips has moved to take key Caribbean assets of Venezuela's state-run PDVSA to enforce a US$2 billion arbitration award, actions that could further impair PDVSA's declining oil production and exports.
Shale oil production is on the rise, but shale producers do not have the ability to quickly erase production. Even as we saw the USA rig count surge.
Conversely, Baker Hughes on Friday reported that the number of active U.S. rigs drilling for oil rose by 9 to 834 this week, the fourth consecutive weekly increase. The oil-rig count had logged gains in each of the last four weeks.
The European oil and gas share index was up 0.5 per cent.
Goehring from G&R Research has the same outlook: "Oil-related stocks have been lagging the oil price, and we believe equities will outperform tremendously in the following months", he says. Make sure your hedges are in place.
Growing U.S. shale production might help close the gap a little, but that is far from enough. The Group is available answer marketing questions and meet your investment needs.