Saras anxious about Iran crude amid new sanctions

July WTI Crude Oil

OPEC's supply cut appears to be working because prices are rising at a time when US oil put is reaching near record levels and continuing to rise.

The world's fifth-biggest crude oil importer has increased its imports of Iranian crude, mainly condensate, or an ultra-light oil since sanctions were lifted in 2016. US crude oil has already gained 17% year to date and 48% from a year ago.

- Oil prices are at four-year highs, raising the price of producing gasoline.

Crude prices have been on edge since US President Donald Trump's decision to exit the country from the Iran nuclear deal, raising the odds of a dispute in the Middle East and creating uncertainty over oil supplies worldwide.

Also supportive to prices was the possibility of hard US sanctions against Iran's oil industry.

If Descalzi's predictions proved true, this could presumably persuade Mazroui to reverse course and oblige OPEC members to pump more in order to compensate for Iran, instead of maintaining the cutbacks.

According to the oil companies' pricing advisories, the cost of kerosene product, another socially impacting fuel commodity, will also be higher by P0.95 per liter.

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Production levels will be a key topic of discussion at the upcoming June 22 OPEC ministerial meeting where the Vienna Agreement, which began in 2017, is expected to be discussed.

The expected resumption of United States sanctions against Iran has sent oil prices spiking due on expectations that global trade in Iranian cude will be curtailed.

Since late 2017, longer-dated USA oil futures contracts are trading at prices lower than nearer-term contracts, a configuration known as backwardation, indicating that the market at least currently doesn't believe prices will continue to be as high as they are now, longer term.

China is crucial to global oil demand growth, and if it keeps its current growth pace, it would support the strong demand growth that analysts expect.

In April, Chinese crude oil imports set a new record-at 9.6 million bpd they beat the previous daily record of 9.57 million bpd from January this year.

The prospect of a drawdown in crude stocks should be supportive for prices along with the tight global supply situation.

In a television interview, U.A.E. Energy Minister Suhail Al Mazrouei said "don't worry about supply", because OPEC has an adequate "buffer" of potential production to offset barrels lost through renewed sanctions.

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