Oil markets cautious on Middle East tensions, increased U.S. drilling

14 November, 2017, 18:04 | Author: Leticia Walters
  • Iran's Crude Oil Price Up 4.5%

Oman's oil minister, Mohammed bin Hamad al-Rumhi, said on Monday that he is confident there will be an agreement among global oil producers later this month to extend output cuts.

On the supply side, tensions in the Middle East raised the prospects of disruptions, traders said, adding it was unclear whether a strong quake that hit Iran and Iraq on Sunday had impacted the region's oil production.

On the other hand, traders expected that the ongoing supply cut, which is led by the Organization of Petroleum Exporting Countries and Russian Federation, would likely prevent a very big fall in oil prices.OPEC and Russian Federation have contributed to the reduction in excess supplies.

The American Petroleum Institute (API) reports weekly crude and refined product inventories later on Tuesday.

Reuters reported last month, citing OPEC sources, that producers were leaning towards prolonging the agreement until the end of 2018, though the decision could be postponed until early next year depending on the market.

Crude Oil outperformed the commodities pack by rallying nearly 25 percent in the last 2 months on the back of production cut from OPEC countries and geopolitical tension that is going on in the world.

The U.A.E. favors maintaining the cuts, which are set to expire at the end of the first quarter, Minister of Energy Suhail Al Mazrouei said.

"A remarkable ability to unlock new resources cost-effectively pushes combined United States oil and gas output to a level 50% higher than any other country has ever managed; already a net exporter of gas, the USA becomes a net exporter of oil in the late 2020s", the IEA said in its 2017 world energy report.

Opec raised estimates for the amount of crude it will need to pump to meet demand next year by 400,000 barrels a day to 33.4 million a day, according to a monthly report yesterday from the group.

Also, OPEC sees no reason for investors to expect oil to hit peak demand before 2040, the organization's secretary general said Monday.

Stocks were 154 million barrels above the five-year average, the excess that OPEC aims to eliminate.

A year ago this week, markets reeled from the surprise election of US president Donald Trump, and eagerly awaited OPEC's November meeting as the last hope for an oil price rally.

Regional concerns in the Middle East include the war in Yemen and growing tensions between Saudi Arabia and Iran.

Bahrain said at the weekend that an explosion that caused a fire at its main oil pipeline on Friday was caused by sabotage, linking the attack to Iran, which denied any role.

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