Published: Thu, September 13, 2018
Finance | By Claude Patterson

Oil price nears $80, Nigeria’s output rises

Oil price nears $80, Nigeria’s output rises

Since spring when the President Donald Trump administration said it would impose sanctions on Iran, crude traders have priced in a risk premium reflecting the supply shortages that may occur when exports from the third-largest OPEC member are cut.

Benchmark Brent crude oil was down 60 cents a barrel at $79.14 by 1330 GMT. This comes amid the Iranian oil sanctions which are set to be imposed on November 4th, while the U.S. have also demanded nations to drop Iranian imports to zero.

"We think oil market fundamentals are increasingly supportive of crude prices, at least at current levels", said Gordon Gray, HSBC's global head of oil and gas equity research. USA light crude fell $1.31 to a low of $69.06 a barrel and was last at $69.42, down 95 cents.

As investors grow concerned that Iranian sanctions may leave the market short of crude oil, November Brent crude futures now trade at a premium of $0.47 over the December contract, highest since May.

Novak said global oil markets were "fragile" due to geopolitical risks and supply disruptions.

Washington has told its allies to reduce imports of Iranian oil and several Asian buyers, including South Korea, Japan and India appear to be falling in line.

Perry will also meet with Russian Energy Minister Alexander Novak on Thursday in Moscow.

He also warned of the impact of United States sanctions against Iran: "This is a huge uncertainty on the market - how countries, which buy nearly 2 million barrels per day of Iranian oil, will act".

Combined output by these three producers has risen by 3.8 million bpd since September 2014, more than the peak 3 million bpd Iran has managed during the last three years.

A group of OPEC and non-OPEC producers have been voluntarily withholding supplies since January 2017 to tighten markets, but with crude prices up by more than 40 percent since then and markets significantly tighter, there has been pressure on producers to raise output.

As Middle East markets tighten, Asian buyers are seeking alternative supplies, with South Korean and Japanese imports of USA crude hitting a record in September.

The Wall Street Journal said OPEC's total oil production climbed last month, in a sign the oil cartel is sticking with a decision to begin pumping out more barrels of crude this summer after more than a year of holding back output.

U.S. crude stocks fell 5.3 million barrels in the week to September 7 to 396.2 million barrels, the lowest since February 2015 and about 3 percent below the five-year average for this time of year, the U.S. Energy Information Administration (EIA) said on Wednesday.

Like this: