Oil Slips as OPEC, Iran Worries Balance U.S. Output

Posted by Joseph Keefe
Thursday, May 3, 2018
Potential of new U.S. sanctions against Iran keep market on edge as OPEC cuts bolstered by Venezuelan declines also support.
Oil prices slipped on Thursday as swelling U.S. crude inventories and record weekly U.S. production clashed with OPEC supply cuts and the potential for new U.S. sanctions against Iran.
Brent crude oil futures were at $72.91 per barrel at 1113 GMT, 45 cents below their last close.
U.S. West Texas Intermediate (WTI) crude futures were 10 cents lower at $67.83 per barrel.
Prices have seesawed, edging lower during Asian trading hours, then higher at the start of the day in Europe, as the market grappled with conflicting fundamental signals.
On Wednesday, a report from the U.S. Energy Information Administration (EIA) showed a 6.2-million-barrel jump in U.S. crude inventories .
But bullish factors, including an increase in Saudi Arabia's official oil selling price to Asia, also underpinned prices, according to Commerzbank analyst Carsten Fritsch.
"It may signal stronger-than-expected demand in Asia," Fritsch said. "This, combined with constraints in (OPEC) production, could lead to higher prices."
State-owned producer Saudi Aramco on Wednesday raised the June price for its Arab Light grade for Asian customers to a premium of $1.90 a barrel to the Oman/Dubai average, the highest since August 2014.
Additionally, the latest Reuters survey of OPEC production showed it pumped around 32 million barrels per day (bpd) in April, slightly below its target of 32.5 million bpd, due largely to plunging output in Venezuela.
Fritsch said the cuts, along with demand growth, were more than offsetting the increase in U.S. oil.
U.S. oil production rose to a record of 10.62 million bpd, putting it ahead of Saudi Arabia, the biggest OPEC producer.
Only Russia pumps more, at around 11 million bpd.
U.S. drilling for new production is also increasing, encouraged by rising prices following OPEC's production curbs.
The May 12 deadline for U.S. President Donald Trump to decide whether to continue waiving U.S. sanctions against Iran was also buffeting downward pressure on prices.
"Overall, we continue to trade a waiting game for the U.S. decision on Iran, waiting to have sanction headlines trigger some frenzied buying," said Olivier Jakob, managing director of energy consultancy PetroMatrix.
Trump has all but decided to withdraw from the 2015 Iran nuclear accord by May 12, sources said, though exactly how he will do so remains unclear.

Iran re-emerged as a major oil exporter in January 2016 when international sanctions against Tehran were suspended in return for curbs on Iran's nuclear programme. 

By Libby George

Categories: Contracts Energy Finance Logistics Middle East Offshore Energy Shale Oil & Gas Tankers

Related Stories

Viridien to Shed More Light on Malaysia’s Offshore Oil and Gas Potential

Vietsovpetro Brings BK-24 Oil Platform Online Two Months Early

MDL Secures Cable Laying Job in Asia Pacific

Floating Offshore Wind Test Center Planned for Japan

PXGEO Nets First Seismic Survey off Malaysia

SPE Offshore Europe 2025 set to drive transformational change for the energy sector

Shelf Drilling Lands New Jack-Up Contract in Vietnam, Extends Egypt Deal

ADNOC Signs Long-Term LNG Deal with Hindustan Petroleum Corporation

Santos and QatarEnergy Agree Mid-Term LNG Supply

Four Jack-Up Drilling Rig Deals Set to Bring In $129M for Borr Drilling

Current News

Pharos Energy Kicks Off Drilling Campaign Offshore Vietnam

Viridien to Shed More Light on Malaysia’s Offshore Oil and Gas Potential

US Pressure on India Could Propel Russia's Shadow Oil Exports

Energy Drilling’s EDrill-2 Rig Starts Ops for PTTEP in Gulf of Thailand

RINA Wins FEED Contract for Petronas’ Flagship CCS Project in Malaysia

ABL Secures Rig Moving Assignment with India's ONGC

Pakistan, Türkiye Deepen Oil and Gas Ties with Offshore Indus-C Block Deal

Eni-Petronas Gas Joint Venture Up for Launch in 2026

Vietsovpetro Brings BK-24 Oil Platform Online Two Months Early

Propane’s Economic Edge for Ports During Trade Uncertainty

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com