What Trump's Iran decision means for oil and gas prices

What Trump's Iran decision means for oil and gas prices”

Brent crude futures, the global benchmark for oil prices, hit their strongest since November 2014 at $77.76 per barrel on Thursday.

During the last round of sanctions, Iran's oil supplies fell by around one million bpd, but the country re-emerged as a major oil exporter after sanctions were lifted by producing 3.81 million bpd in March 2018.

Kuwaiti oil minister Bakhit al-Rashidi said his country will work with OPEC and non-OPEC oil producers to limit impact of any possible shortage in supplies, state news agency KUNA reported. Prices had already been rising as a strong global economy has kept demand high for gasoline and other refined products. In the United States inventory levels are now below the five-year average.

Now that it's left the accord, the USA intends to reimplement sanctions on Iran following certain "90-day and 180-day wind-down periods", according to Treasury Secretary Mnuchin.

"For the US economy, a prolonged rise in oil prices could reverse part of the benefits from the fiscal stimulus", Daco wrote. It's unlikely for now. "Importantly, Iranian compliance with its JCPOA obligations may potentially help it find alternative routes to export crude oil to global markets", Barclays says.

Even if some Iranian oil is off the market, Melek said there was capacity for members of the Organization of Petroleum Exporting Countries (Opec) to increase production to make up for the shortfall.

Before the White House announcement, oil traders expected Opec members and Russian Federation to stick to their plan to continue reducing output into 2019, which has helped bring supplies and demand back into balance. That plan could be revisited at the next Opec meeting in June.

Plus there are the U.S. shale oil producers which might make up for any shortfall.

Oil market watchers also expect that American producers will also respond to higher prices by drilling more.

Considering European signatories still support the deal, Iran said it would still comply and there are six months before the sanctions unfold, so there was still time to work something out, Melek said. There is a lot of uncertainty in the market which stems from the White House itself, said Eric Armitage, chief investment officer of East Alpha, a hedge fund specializing in energy.

Crude prices slipped on Thursday, giving up early gains as investors took profits on a rally triggered by potential disruption to oil flows from Iran.

Looks like OPEC is at it again.

'At the same time, weak oil prices since 2014 have resulted in many energy firms budgeting for $50 oil prices in 2018, putting energy companies in a good position. No good and will not be accepted! He said for instance that between the two large caps, Sembcorp Marine, seen as a "pure" O&G-related play, booked a higher percentage point gain compared to Keppel Corp, which boasts a multi-business portfolio not restricted to just within the O&G industry. But thanks to the boom in shale oil production, the United States is now a key oil producer and it should instead enjoy a windfall as oil prices rise. As Turnill notes: 'Oil prices have run well ahead of energy stocks this year, but this trend has started to turn'. In a statement late Tuesday, the Saudi energy ministry said was "committed to supporting the stability of oil markets".

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