Oil prices temporarily supported a resumption of US sanctions against Iran.
November 4, 2018 at 8:36 pm TASR
NEW YORK – A steady two-year increase in oil prices could end. The reason for this is the increase in market supply and the growing concern that slow economic growth will cause global demand to weaken.
The price of US crude oil WTI was above $ 75 a barrel (159 liters) and Brent crude oil price of more than $ 85 a barrel. Since then, black gold has been rewarding.
The December WTI contract closed on Friday (Nov. 2) at $ 63.14 a barrel and a January Brent crude oil contract at $ 72.83 a barrel.
Temporary black gold prices supported a resumption of US sanctions against Iran. But that changed last week. The three largest producers in the world – Russia, Saudi Arabia and the United States – signaled that they are currently pumping record or near-record oil volumes.
In addition, the US announced on Friday that it will temporarily grant eight state sanctions exemptions, which will begin to apply on Tuesday (Nov. 6) to continue importing Iranian oil, which has alleviated concerns about the lack of supply in the Marketplace.
These factors, coupled with a slew of weak data from China and other emerging economies, have shifted prospects for the oil market and fears of oversupply are emerging again. This caused US oil futures prices to fall to their April levels, and oil prices were cut short.
Some analysts, however, think the current sale went too far and that the price drop was too fast. The major oil producers of the Organization of the Petroleum Exporting Countries (OPEC) can not increase production if necessary, and there is a risk of interruptions in the supply of Iran, Libya and Venezuela.
"The loss of 1 million barrels a day from Iran, an additional decline in the mining industry in Venezuela along with the geopolitical disruptions in Libya and Nigeria, can also eliminate the small idle capacity we have left," said Bernstein experts in this week.
OPEC output is the highest in two years. US production hit a record 11.3 million barrels per day in August, and Russia's production at 11.4 million barrels per day represents a post-Soviet high.