+44 207 394 30 90 (London)

Oil up as U.S. drilling stalls, Iranian sanctions bite

Main-Conference » News » Oil up as U.S. drilling stalls, Iranian sanctions…

LONDON (Reuters) – Oil prices rose on Monday as U.S. drilling stalled and investors anticipated lower supply once new U.S. sanctions against Iran’s crude exports kick in from November.

Benchmark Brent crude oil rose $1.09 a barrel, or 1.4 percent, to a high of $77.92 and was trading at $77.50 by 1130 GMT. U.S. light crude was 50 cents higher at $68.25.

“A higher oil price scenario is built on lower exports from Iran due to U.S. sanctions, capped U.S. shale output growth, instability in production in countries like Libya and Venezuela and no material negative impact from a U.S./China trade war on oil demand in the next 6-9 months,” said Harry Tchilinguirian, oil strategist at French bank BNP Paribas.

“We see Brent trading above $80 under (that) scenario,” he told Reuters Global Oil Forum.

SPONSORED

U.S. drillers cut two oil rigs last week, bringing the total count to 860, Baker Hughes said on Friday.

The number of rigs drilling for oil in the United States has stalled since May, reflecting increases in well productivity but also bottlenecks and infrastructure constraints.

Outside the United States, Iranian crude oil exports are declining ahead of a November deadline for the implementation of new U.S. sanctions.

Although many importers of Iranian oil have said they oppose sanctions, few seem prepared to defy Washington.

“Governments can talk tough,” said Energy consultancy FGE.

“They can say they are going to stand up to Trump and/or push for waivers. But generally the companies we speak to … say they won’t risk it,” FGE said. “U.S. financial penalties and the loss of shipping insurance scare everyone.”

While Washington exerts pressure on countries to cut imports from Iran, it is also urging other producers to raise output in order to hold down prices.

U.S. Energy Secretary Rick Perry will meet counterparts from Saudi Arabia and Russia on Monday and Thursday respectively as the Trump administration encourages the world’s biggest exporter and producer to keep output up.

Investors are concerned about the impact on oil demand of the trade dispute between the United States and other large economies, as well as the weakness of emerging markets.

“Trade wars, and especially rising interest rates, can spell trouble for the emerging markets that drive (oil) demand growth,” FGE said.

Despite this, the consultancy said the likelihood of much weaker oil prices was fairly low as the Organization of the Petroleum Exporting Countries would probably adjust output to stabilize prices.

Source: https://uk.reuters.com

MORE

Icebreaker Diplomacy: Russia’s New-Old Strategy to Dominate the Arctic

Russia’s Baltic Shipyard (St. Petersburg) held a grand ceremony, on May 25, to celebrate the launching of the nuclear-powered Project 22220 (LK-60Ya) icebreaker Ural (Geoenergetika.ru, May 27, 2019). Following the festivities, Russian Central Bank head Elvira Nabiullina stated that the event would be further commemorated by issuing a special coin hailing the new Project 22220…


MIDDLE EAST: BROOGE TO SET UP NEW FUJAIRAH OIL REFINERY

The facility, with a first phase slated for completion in Q1 2020, will produce IMO 2020-compliant fuel. According to Reuters, Brooge Petroleum and Gas Investment Co (BPGIC) said that the capacity of the refinery will be 250,000 barrels per day. The news follows on from last month’s announcementthat Twelve Seas Investment, together with a recently-formed…


Import substitution in stevedoring sector

Transshipment of Russia’s foreign trade cargo via the ports of the Baltic states and Ukraine in the first half of this year fell by 7.5% to 22.2 million tonnes. Their share has decreased from 6.51% in HI’2017 to 5.88% in HI’2018. High dependence is still observed in the segment of dry bulk cargo while the…