Brent last week temporarily breached the symbolic $80-a-barrel threshold for the first time since 2014.
"In my updated forecast, I calculated that Iran could decrease its production to 560,000 - 700,000 barrels per day at the end of 2018".
According to International Energy Agency (IEA), "The potential double supply shortfall represented by Iran and Venezuela could present a major challenge for producers to fend off sharp price rises and fill the gap". Iran pumps about 4 per cent of the world's oil. The company preferred to delay its $2 trillion IPO rather than reduce its offer price when oil prices were lower.
Daily July WTI Crude Oil
Falling Venezuelan output due to an economic crisis has helped the Organization of the Petroleum Exporting Countries deliver a bigger cut than intended under its pact with Russian Federation and other producers to curb supplies and remove a global glut. Potential sanctions from the US against Venezuela's socialist regime will likely cause further production declines. The latter will materialize, since more than half of India's remittances are reported to be channelled through the Gulf countries, which are likely to witness better economic conditions with higher oil prices.
USA crude stockpiles are forecast to have declined by 2.8 million barrels last week, a third weekly fall in a row. Adding to the problem is the strengthening dollar against all countries.More news: GE Transportation reaches agreement to merge with Wabtec
Over the past 12 months, during the second half of 2017 and into the first half of 2018, oil prices have been in an nearly non-stop bull market, going ever-upward.
The recent rise in prices sends a strong signal about the need for more production and slower growth in oil consumption. Saudi would like to come out with its IPO when the oil market is in frenzy. If oil prices remain high, they would have to succumb to popular pressure to cut excise duty on petrol and diesel to prevent any further spike in its retail rates even as it adversely impacts its fisc. US shale oil executives may no longer restrain spending, and countries like Saudi Arabia and Russian Federation will be tempted to fill the void left by Iran even before their supply agreement ends. The higher crude oil imports bill could be offset by higher oil and non-oil exports (and of course, remittances). The US will consider that to be too small a price to pay especially when it has been ravaging countries on a whim that they might be a threat to the US.
In the next few months, the narrative will increasingly turn to boosting supply and restraining demand in order to stabilise inventories and return the market to balance.More news: ZTE could face fresh US$1.3b fine
Maduro, who has always blamed Venezuela's current economic crisi on the fall in oil prices, now remains silent in the face of this new price increase that should be propelling Venezuela towards prosperity.More news: Palestinian plea to ICC could speed up war crime probe