Today's price increase was largely due to Saudi Arabia's latest move. Industry traders believe there are at least two other reasons why traders should be more optimistic this week. Let us see how this pans out by Friday. Indicators are as follows:
1. Iran's framework agreement for their nuclear deal. Last week's
framework agreement rendered it uncertain as to when or if the country will
unleash 0.8 - 1M/bd. Iran is currently under sanctions where it can export only
1M/bd at the moment and even if the sanctions are dropped we may not see an
immediate increase in production from Iran for at least 6 months.
2. Saudi Arabia raised prices for shipments to
Asia, its largest regional market. This could be a sign of improved demand from
Asia. Saudi Arabia is OPEC's largest exporter and we have seen the Gulf state
struggle to maintain market share by introducing price cuts to the Asian market
in the past. This is a strong indicator for better prices this week.
3. Fighting in the Yemen. Ongoing concerns over conflict in Yemen also
supported prices Monday, as the conflict between a Saudi-led coalition and
Shiite Houthi forces continued in Aden, a port city located near the Bab el-Mandeb
Strait, a chokepoint between the Horn of Africa and the Middle East, and a
strategic link between the Mediterranean Sea and the Indian Ocean. Closure of the Bab el-Mandeb could keep tankers from the Persian Gulf
from reaching the Suez Canal or SUMED Pipeline, diverting them around the
southern tip of Africa, adding to transit time and cost
Brent May crude was up $3.08, or
5.6 percent, to $58.03 a barrel at 1:01 p.m. EDT (1701 GMT), having reached $58.20
intraday.
U.S. May crude was up $2.78, or 5.7
percent, at $51.92 a barrel, just below its $51.95
intraday peak.
visit references below
www.oilpro.com
www.euronews.com
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