Crude Oil Higher On Dwindling OPEC Output

Source U.S. Energy Information Administration Short Term Energy Outlook May 2018

Concerns over the impact of USA re-sanctioning on Iran apart from other factors like economic crisis in Venezuela are keeping the oil prices high.

The world's benchmark crude was up 85 cents, or 1.1%, at $77.97 a barrel by 11:22 a.m. ET (1522 GMT).

Brent crude futures, the worldwide benchmark for oil prices, were at $78.37 per barrel at 0028 GMT, up 14 cents from their last close and not far off a three-and-a-half year high of $78.53 a barrel reached the previous session.

Crude futures hit the highs as the markets anticipated a sharp fall in Iranian crude supply once US sanctions take effect later this year.

OPEC is to focus on oil inventory, rather than price.

Elsewhere, supply concerns have been mounting over the last week after President Donald Trump the USA pulled out of the Iran nuclear deal - a move that reimposes sanctions on Iranian barrels.

Source U.S. Energy Information Administration Short Term Energy Outlook May 2018
Source U.S. Energy Information Administration Short Term Energy Outlook May 2018

China, France, Russia, Britain, Germany and Iran all remain in the nuclear accord that placed controls on Iran's nuclear program in exchange for a relaxation of economic sanctions against Iran and companies doing business there, Reuters reported.

Oil prices rose as OPEC reported that the global oil glut has been virtually eliminated, while US crude´s discount to global benchmark Brent widened to more than $7, its deepest in five months. China's refinery runs rose almost 12 percent in April from a year earlier, to around 12.06 million barrels per day, marking the second-highest level on record on a daily basis, data showed. Investors are watching whether OPEC and its allies such as Russian Federation intend to end output cuts and increase production if renewed American measures restrict the Persian Gulf state's exports.

Yesterday, OPEC downplayed the impact of the United States shale boom, but warned about USA trade squabbles.

Meanwhile, Saudi Arabia pumped the least crude since output cuts began in early 2017, with all nations in the Organisation of Petroleum Exporting Countries except Iraq exceeding or matching curbs pledged under a deal aimed at clearing a glut.

OPEC's success with the oil production cutting deal has been to a significant extent aided by Venezuela's catastrophically dropping production as the country grapples with foreign exchange shortage, USA sanctions, and a devastating economic crisis.

On Monday, however, markets were held in check by news of an increase in US drilling for oil.

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