As of midday Friday, oil prices traded near $70 per barrel for the first time since 2014. The U.S. benchmark trails the global Brent crude price, which had breached the $70-level briefly in January, and has stayed above that mark consistently since the second week of April. We are not just talking about a return to strained relations between the United States and Iran if Trump pulls out of the deal, but we also need to look at the risk of what impact this could have on regional markets within the Middle East. Prices climbed 0.3% last week.
Assuming that President Trump opts for sanctions, it is expected that the country's oil shipments to its major customers such as the EU, China, India, Japan, South Korea and Turkey will decline by half a million to 1.2 million barrels per day (bpd) based on various estimates from leading worldwide banks.
US oil firm ConocoPhillips has moved to take key Caribbean assets of Venezuela's state-run PDVSA to enforce a $2 billion arbitration award, actions that could further impair PDVSA's declining oil production and exports.
Brent crude oil settled up $1.25 at $74.87 a barrel. The U.S. has to ratify it once every six months, and the next deadline for that is May 12.
Also boosting prices is the widespread expectation that President Donald Trump will withdraw from the Iranian nuclear pact.
But that is not a given.
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The deepening economic crisis in Venezuela is also threatening the OPEC members already low oil supplies. But this depends on its ability to hold onto the current non-fundamental risk premium, estimated to be somewhere between $5 and $10. China for its part seems to be pivoting away from Saudi oil as the kingdom continues to increase its official selling price (OSP) for Arab Light crude.
As global oil markets shift their attention from US shale oil production back to a resurgent Saudi Arabia and Russian Federation and geopolitical concerns bearing down on oil prices, Citigroup said last Wednesday that the U.S.is poised to surpass Saudi Arabia next year as the world's largest exporter of crude and oil products.
Crude oil is produced by a small group of countries, which include the United States, Saudi Arabia, and Russian Federation.
Futures in NY and London jumped as much as 1.4 percent.
Looking at crude oil headlines, the commodity is rising thanks to ongoing concerns regarding Venezuelan and Iranian supply.
Multi-year low spot market prices followed US government data that showed a 6.2-million-barrel jump in crude inventories last week. The calculation that is made in market of raw materials is as follows: Iran now produces 3.8 million of barrels daily, and, if Washington opted for hard hand, it will stop exporting equivalent to between half a million and one million barrels per day.