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Gas prices rise again

15 May, 2018, 22:44 | Author: Sara Gill
  • Oil slips as Opec seen able to offset impact from Iran sanctions

Following the news that the United States government will withdraw from the nuclear accord with Iran or Joint Comprehensive Plan of Action (JCPOA) and re-impose sanctions on the country, Will Scargill, Senior Fiscal Analyst for Oil & Gas at GlobalData, considers the impact that this could have on Iranian oil production. The immediate aftermath has seen tensions between Israel and Iran rise in Syria, already leading to one military clash.

The world is now watching the growing tensions in the Middle East, and oil market analysts are guesstimating just how much Iranian oil supply the renewed USA sanctions could stifle.

"In 2012, the reduction in Iranian crude production and exports were around 1 MMBPD", Wittner said, Reuters reported.

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

It is unclear how USA sanctions will affect Iranian oil.

Increased demand and restricted supply caused oil prices to soar today with Brent crude oil reaching $79 (£58) per barrel which is the highest since November 2014.

At the same time, China's domestic crude oil production has been languishing near June 2011 lows in the first quarter this year, prompting higher imports to meet growing demand.


But Saudi Arabia could still keep supply constrained as it needs higher oil prices to fund its government.

The tightening market has just about solved the global supply overhang that has weighed down oil prices between 2014 and 2017.

As of this writing, the oil companies that already advised on price increases include Flying V of the Villavicencio Group, Pilipinas Shell Petroleum Corporation, PTT Philippines, Chevron (which is carrying the Caltex brand) and Seaoil effective 6:00am on Tuesday; while the rest of the industry players are expected to follow the price adjustment trends.

They'll also be watching the results of Iraq's parliamentary elections, which are expected to be announced Monday and could, according to S&P Global Platts, "reshape its oil ministry and delay output expansion projects in OPEC's second-largest member".

According to the oil companies' pricing advisories, the cost of kerosene product, another socially impacting fuel commodity, will also be higher by P0.95 per liter.

Iran now provides approximately 4 percent of global crude supplies and is the third-biggest manufacturer in the OPEC. In addition, there are downside risks to Iranian crude oil exports.

On Monday, however, markets were held in check by news of a rise in USA drilling for new oil production.

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