Oil at $100 Is a Possibility Next Year, Bank of America Says

Anna Jefferson
May 14, 2018

US President Mr Donald Trump has threatened to pull out of the Iran deal by not extending sanctions waivers when they expire on May 12 unless European signatories of the accord fix what he calls its "flaws".

Another European buyer, Italy's Eni, said it is buying 2 million barrels a month of Iranian crude as part of a contract running to year-end, adding any new sanctions would take six months to kick in. This price increase is related to fears that the global supply of oil will be squeezed if the Iran nuclear deal falls through. It is also possible that the effect of the sanctions has already been factored into prices, so any immediate impact will be limited.

Analysts and officials say Trump threatens to create all by himself the kind of split between allies that Russian Federation and China have tried and failed to foster for years, with Europe now relying on Moscow and Beijing to keep the Iran deal alive. "Iranian is not the only crude".

The U.S. hope is that Iran will be dragged to the table by the resumption of U.S. sanctions - and possibly the imposition of more - which would penalize European and other companies and likely cripple Iran's oil-driven economy.

The price of oil rose sharply on Wednesday to its highest since 2014 on expectations that the new sanctions will crimp Iranian exports.

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Sunday, the Colorado Parks and Wildlife Department said . "She came out. she yelled at the animal", CPW spokesperson Mike Porras. The woman told authorities that Kimberly had gone outside to investigate noises in the yard she may have thought was her dog.

The re-imposition of the sanctions comes in the wake of a tightening oil market due to strong demand, particularly in Asia, and while top exporter Saudi Arabia and number 1 producer Russian Federation are leading efforts to cut a global supply glut to spur demand and increase prices. But Chinese refiners said there were alternative suppliers, especially in Russia, Saudi Arabia and West Africa. The U.S. administration also believes that the lifting of sanctions against Iran under the accord only benefits the country.

Meantime, it seems that the oil market is already in a bit of a supply/demand deficit. USA output is creeping closer to that of top producer Russian Federation, which pumps about 11 million bpd. Iran pumps about 4 percent of the world's oil and exports about 450,000 barrels per day (bpd) of crude to Europe, according to tanker-tracking data. It may signal stronger-than-expected demand in Asia and underpin prices.

He said the effects of the United States move were already being felt in rising oil costs and an increase in political uncertainty in the Middle East.

The nuclear deal was a multilateral framework between Iran and the United States, Britain, France, Germany, China and Russian Federation.

The EIA on Tuesday raised its forecast for USA output in its monthly report to 12 million bpd late next year.

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In a rare statement criticizing Trump, President Obama makes a convincing argument that this common misperception is incorrect. British Foreign Secretary Boris Johnson also made a last-minute dash to Washington but did not get to see the president.

Libya has managed to lift its production to around 1 million bpd but risks still persist with rival factions fighting for control and suddenly disrupting oil facilities' operations and oil export terminals.

Goldman Sachs Group Inc. predicts that Brent will rise to $82.50 a barrel in the coming months, and says there's a chance prices could surpass that level, but sees oil subsiding again in 2019.

"We believe the previous 1 million-bpd limit for exports (imposed during previous sanctions) will be reimposed".

South Africa has strong and longstanding trade relations with both countries, with the US being South Africa's third biggest trading partner.

Russian Federation lacks the expertise to develop complicated new projects, which could result in output peaking in 2020 and declining thereafter.

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