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Oil Prices Steady Amid US Sanctions Against Iran

Oil Prices Steady Amid US Sanctions Against Iran

President Trump's decision to pull the USA out of the Iran nuclear deal "constitutes a major geopolitical shift" which could trigger a move in the direction of "stagflation", a global strategy team at Citi, led by Mark Schofield, said in a research note, CNBC reported.

Fears of a trade war emerged in April when both sides engaged in a multi-billion dollar tit-for-tat over tariffs. Market observers and analysts argue that US energy stocks are in a position to outperform broader equity markets this year, even if oil prices don't move higher.

US crude futures climbed 26 cents, or 0.37%, to $70.96 a barrel on the New York Mercantile Exchange.

Markets were dampened somewhat by a monthly market report from the Organization of Petroleum Exporting Countries that made few major revisions to its global expectations.

A almost 200% jump in oil prices over the past two-plus years could soon create a "particularly hostile environment" for global investors, Citibank economists warned Monday.

In China, the world's biggest oil importer, refinery runs rose almost 12 percent in April compared with the same month a year ago, to around 12.06 million barrels per day, marking the second-highest level on record on a daily basis, data showed on Tuesday.

OPEC added that the USA trade policy and sanctions are fuelling that uncertainty at a time when there are concerns that rising interest rates, especially in the United States, could crimp economic growth.

This decline is largely due to an Opec-led supply cut deal put in place since the beginning of previous year to help stabilize prices, coupled with growing demand in Asia. But for shale developments, mostly in the United States, spending should increase by 20 percent, and then moderate to 16 percent for next year.

The most recent EIA study, included in the agency's short-term energy outlook, showed that global production of oil outside Iran averaged 92.4 million barrels per day from February to March, compared to 91.0 million bpd from 2015 to 2017.

Crude oil prices have increased more than 10% over the past month after President Donald Trump signaled it is likely the US will withdraw from a 2015 global agreement with Iran that eased sanctions in return for curbs to the country's nuclear program, the Wall Street Journal reports.

"With China's robust economy anticipated to drive oil demand this year, oil prices could remain supported in the near term", he said. This compares to 340 million barrels above the average in January 2017.

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