Economy

Brent crude prices dip on rising supply, global market woes

Brent crude prices dip on rising supply, global market woes”

"One discussion that is developing is that (trade tensions) are hurting demand for crude oil".

Brent crude oil futures had fallen 58 cents to $77.04 a barrel by 1423 GMT. Now, selling dollars from the oil income at a much higher rate on the local market, gives the government so much more rials to take care of its domestic operating expenses.

Since most crude oil trading is in US dollars, a strengthening of the USA currency can make the commodity more expensive in other currencies.

Hedge fund managers continued to liquidate former bullish positions in oil last week, with signs of short-selling appearing for the first time in over a year.

Brent crude prices reached their highest level in four years in the week that NIOC released the announcement for offering crude oil in the Energy Exchange, which were followed by a downtrend.

In North America, however, there is no oil shortage as U.S. crude oil production has increased by nearly a third since mid-2016 to about 11-million barrels a day. But a devalued currency leads to many other economic problems and popular anger.

Even with USA sanctions on Iranian exports due to come into force on November 4, oil prices have fallen about $10 a barrel since four-year highs reached in early October.

Saudi Arabia's OPEC governor said on Thursday the market could face oversupply in the current quarter, and after a slump in global equities clouded the outlook for demand. Iran is expected to do everything to make the purchase of oil as easy as possible for the biggest oil consumers in the market. Now, the country needs a new narrative.

Additionally, hedge fund managers have reportedly cut their bullish positions in crude futures and options for four weeks in a row to their lowest since July 2017, due to an uncertain demand outlook and other factors: in an editorial for Reuters, John Kemp, founding partner at Again Capital, wrote that "Rising oil production from Saudi Arabia, the United Arab Emirates, Kuwait, and Russian Federation has eased concerns about the availability of supplies once us sanctions on Iran are re-imposed in November". Crowds at one point shut down Tehran's sprawling Grand Bazaar, an economic center and a center where the 1979 Iranian Revolution gained footing.

On Saturday, Iran's parliament approved a government economic reshuffle, according to a Reuters report. "Our main enemy, America, faces us with a drawn sword and we have to fight it and we have to unite". While a number of industry experts expect that foreign firms will still face penalties from the United States for trading with Iranian businesses, as a breach of sanctions, most there are still good prospects that Iran's action will be far from ineffective.



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