Iran Upbeat About Oil Exports Despite Sanction Threat

Screen Shot 2018 05 10

Screen Shot 2018 05 10

President Donald Trump's decision to withdraw from the 2015 nuclear deal risks exposing European countries that have since invested in Iran to renewed US sanctions after "wind-down" periods of three to six months expire.

The analysts said their target price for Brent, the global benchmark, was $90 for the second quarter of next year.

There are, however, signals that other OPEC suppliers will increase production to offset supply cuts from Iran.

Iran is confident that its oil exports will not be disrupted by the re-imposition of sanctions after the United States vowed to withdraw from the Nuclear Deal, according to Iranian Oil Minister Bijan Zanganeh as quoted by Reuters.

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Meanwhile, output from third-largest OPEC producer Iran is uncertain on renewed USA sanctions.

West Texas Intermediate crude rose 26 cents to settle at $70.96.

The sanctions come amid an oil market that has been tightening due to strong demand, especially in Asia, and as top exporter Saudi Arabia and No.1 producer Russian Federation have led efforts since 2017 to withhold oil supplies to prop up prices. That would hurt not just Iran's economy but also the dollar's liquidity, as the global oil trade undergirds the greenback, said Edward Al Hussainy, senior analyst, global rates and currency at Columbia Threadneedle in Minneapolis.

The case around Iran comes amid the already tightening market due to strong demand, especially in Asia, given that Saudi Arabia's largest exporter and Russia's largest producer since early 2017 have restricted supply to support prices.

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Fuel is expected to rise to $3 per litre following President Donald Trump's decision to pull out of the Iran nuclear deal. The five-year supply average is 420 million barrels.

The US plans to reintroduce sanctions against Iran, which produces about 4% of world oil supplies after abandoning the agreement reached in 2015. That may put in jeopardy an existing agreement among OPEC and non-OPEC nations to curb output.

Washington has given European firms doing business in Iran up to six months to wind up investments or risk US sanctions and they are also forbidden from signing any new contracts with Iran.

The American president's withdrawal, as well as increasing investments into alternative energy, sent prices soaring last week to their highest level since 2014, the NZ Herald reported. She had a more conservative Brent crude average of $US70 a barrel for 2018, forecasting it to fall to $US68 a barrel in the second quarter of 2019.

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