Oil prices rose to multiyear highs on Tuesday, bolstered by signs that major oil producers are still committed to reducing supply and the rising specter of US sanctions against Iran. Why would oil prices move that much higher from current levels, which are already elevated?
High oil prices and low finding cost in the region which has relatively shallow wells help drive exploration in the farm belt where an average well produces 40-50 barrels-a-day over a 15-20 year life span. Total global demand is now seen at 98.85 million bpd.
OPEC and Saudi Arabia made similar statements a year ago at the beginning of their initiative to curb oil production, and some pundits took this to be a way to avoid any predictions that could prove wrong of higher oil prices resulting from their cutbacks.
Much of the Iran's oil exports head to Asia now, with over than 1.5 million barrels per day sent to the likes of China, Japan, South Korea, and India.
Production levels will be a key topic of discussion at the upcoming June 22 OPEC ministerial meeting where the Vienna Agreement, which began in 2017, is expected to be discussed. Steady refining margins and backlog cargoes to some independent refiners contributed to the record import volumes.
Mariners' Cano may need surgery on broken hand
Seattle's James Paxton (2-1) takes the mound Sunday for the first time since throwing a no-hitter Tuesday at Toronto. Coming into the weekend, the Mariners' top hitter was Dee Gordon with 49 hits, 22 runs and eight RBI.
The US added 10 working oil rigs last week, with the total number rising to the highest since March 2015, according to data from Baker Hughes.
Changes in oil supply and demand are expected to weigh on prices in the future.
As such, traders should keep an eye out for exactly what European and Asian allies do following the imposition of sanctions from the U.S., as this will greatly impact quite how much oil is taken off the market.
"The Oil Price Information Service [OPIS] global head of energy analysis blamed fresh geopolitical tensions for his bullish forecast - citing a potential USA military response if Iran resumes its nuclear program, Venezuela's oil production nose diving and "spectacular" global demand", reports CNBC. "Plus we see a high likelihood of OPEC working with Russian Federation in 2019 to set a floor on oil prices".
European countries and companies that continue to do business with Iran could face USA sanctions, National Security Adviser John Bolton said on Sunday.
"So far the impact on the global economy has been minor and negligible, but the build-up of potentially disruptive concerns has increased", OPEC noted in its monthly oil market report.