Sign Up for FREE Daily Energy News
  • Stay Connected
  • linkedin
  • twitter
  • facebook
  • youtube2

Copper Tip Energy Services
Copper Tip Energy

Iran deal a wild card for oil market strained by supply risks

These translations are done via Google Translate
  • Iran deal would have knee-jerk reaction on oil prices -analyst
  • SPR releases to end in fall, pointing to tighter market
  • Oil will fall if Russia moves exports to other regions -analyst
  • For a table of crude price forecasts, click

Aug 31 (Reuters) – A looming EU embargo on Russian oil is expected to exacerbate supply tightness and keep prices in triple digits this year unless there is a return of Iranian barrels, a Reuters poll showed on Wednesday.

A survey of 41 economists and analysts forecast benchmark Brent crude would average $103.93 a barrel this year, down from a forecast of $105.75 in July but above its current $100 trading level.

U.S. crude was seen averaging $99.91 a barrel in 2022, down from a July consensus of $101.28.

Oil prices have come off highs in March of nearly $140 on recession fears, but concerns about supply remain at the forefront, analysts said.

Fundamentals point to higher prices, with spare capacity below 2 million barrels per day (mbpd), oil inventories at multi-year lows and the European Union set to sanction Russian oil via shipping in December, said UBS analyst Giovanni Staunovo.

“Also, ending sales from the strategic oil reserves of OECD countries will remove more than 1 mbpd of supply from November, pointing to tighter markets at the end of the year.”

Most buyers have been cutting back on imports of Russian oil products since Moscow’s invasion of Ukraine, with the EU sanctions due to tighten later this year and a full ban agreed from February 2023.

EnerStar Solutions

“However, if and when the market realises that Russia is still able to shift exports to other regions, oil prices will retreat,” said John Paisie, president of Stratas Advisors.

Russia’s supplies to Asia as well as to some African states are growing, as buyers snap up discounted oil shunned by Western countries. read more

Reuters Graphics Reuters Graphics
Reuters Graphics Reuters Graphics

Low spare production capacity leave little option for raising output, said Carsten Fritsch, senior commodity analyst at Commerzbank.

Top oil exporter Saudi Arabia last week said that the OPEC+ group of oil-producing nations may need to reduce output to balance the market, leaving traders anxious ahead the group’s meeting on Sept. 5. read more

“The wild card is Iran nuclear deal, but it will likely have a knee jerk reaction on oil price rather than a sustained one,” said DBS Bank analyst Suvro Sarkar.

Iran has received Washington’s response to an EU-drafted final offer for saving Tehran’s 2015 nuclear deal with major powers. read more

If the deal is implemented, analysts see Iran adding as much as 2 million bpd to the market in 6-12 months.

Reuters Graphics Reuters Graphics
Reuters Graphics Reuters Graphics

Share This:

More News Articles