Published: Tue, May 15, 2018
Finance | By Loren Pratt

Trump has options if markets panic on Iran

Trump has options if markets panic on Iran

Meanwhile, Iran called for clarity over its nuclear deal with world powers, following U.S. President Donald Trump's withdrawal from the 2015 pact.

"We introduce a second-quarter $US90 a barrel Brent price target for 2019 and see a risk of $US100 a barrel oil next year, although we are concerned that these market dynamics could unfold over a shorter timeframe", BoA strategist Franciso Blanch said. If OPEC and Russian Federation kept in place their existing oil production cuts for 2018 and beyond, the price could even rise to $US100 before the end of next year, they said.

Global benchmark Brent LCOc1 gained $1.11 to settle at $78.23 a barrel.

First, while oil markets may have already priced in a USA withdrawal from the Iran deal, they seem unlikely to have done the same for a further decline in oil exports from Venezuela.

The Brent crude price leapt to $US77.97 a barrel overnight before slipping 0.5 per cent in Friday afternoon trading to $US77.22.

It's not often that an OPEC producer accuses the USA of driving up oil prices.

Both oil futures contracts hit their highest since November 2014 last week at $78 and $71.89 a barrel respectively as markets anticipated a sharp fall in Iranian crude supply once USA sanctions bite later this year.

Crude oil production in the United States can also offset a possible market hole from Iran.

"The oil market was underpinned in April by renewed geopolitical issues, tightening product inventories and robust global demand", OPEC said in its report.

He tweeted on Tuesday that "Donald Trump simultaneously lied about the Iranian nuclear deal, undermined global confidence in USA commitments, alienated our closest allies, strengthened Iranian hawks, & gave North Korea more reason to keep its nukes".

"The market is now focused on OPEC and other producers' ability to react to this potential supply disruption", ANZ bank said on Friday. This would essentially end the OPEC-led deal to trim production.

In China, the biggest single buyer of Iranian oil, Shanghai crude futures hit their strongest in dollar terms since they were launched in late May, around $73.20 per barrel.

"In 2012 the reduction in Iranian crude production and exports was around 1 million bpd", Wittner said.

US light crude CLc1 was down 66 cents at $70.70, off a 3-1/2 year high of $71.89 it hit on Thursday.

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