US sanctions on Iranian exporting goods have pushed oil prices higher since the beginning of the week. Despite concerns as to how demand could be affected by ongoing US – China trade tensions or Russian and Saudi Arabian plan to increase crude oil output, speculations towards lower supply are dominating the marketplace, although current sanctions do not directly concern Iran’s oil exports (i.e. USD purchases, automotive industry, coal, metals).
Accounting for 5% of total oil production, Iran, the third largest OPEC producer, is surely an important stakeholder of the industry, which can have a strong influence on the global market, but as US sanctions will be taking place at the beginning of November 2018, anything could happen since then. Strong oppositions expressed by China, India and the EU with regards to US sanctions against Iran could play an important role in the negotiations.
Since the beginning of the week, Brent crude, WTI and Shanghai Crude gained +2%, +1.11% and +4.51% and trade at $ 74.70, $ 69.25 and CNY 530.60 ($ 77.67) respectively.
As US crude inventories released by the API indicated a decline in inventories of 6 million barrels (consensus: -3.33 million barrels) and EIA inventories data are approaching later today and are expected to be lower (consensus: -2.16 million), a lift in crude prices is favored. WTI is heading along $ 69.90.
By Vincent Mivelaz