Easing trade tensions give slight boost to oil prices

Easing trade tensions give slight boost to oil prices

The Organisation of Petroleum Exporting Countries (OPEC) has raised its forecast for global oil demand growth this year, but added that sanctions, tariffs, and the United States withdrawal from the Iran nuclear deal are strong indications of rising uncertainty over the global economic growth momentum. OPEC also boosted its forecast for demand this year whiling trimming its outlook for global oil production.

In China, the world's biggest oil importer, refinery runs rose almost 12 percent in April compared with the same month a year ago, to around 12.06 million barrels per day, marking the second-highest level on record on a daily basis, data showed on Tuesday. "If the complex can break above the multiyear highs set last week, the charts suggest we could see another 5-10% of upside near term".

While a huge accretion to Excess Crude Account is expected, public finance analysts also said the current situation will impact positively on the implementation of Nigeria's 2018 budget which was benchmarked on $45 per barrel and the production of 2.3 million barrels per day.

The increase was mainly the result of higher crude production in Saudi Arabia - the world's largest crude exporter and the de facto head of OPEC - and Algeria, the report said.

The bloc's forecasts pushed oil prices to new three-and-a-half-year heights, building on last week's rally.

Otunuga told Arab News that the price of oil has further room to rise this week.


Brent crude was up 20 cents at 77.32 dollars a barrel by 1315 GMT and USA light crude rose 10 cents to 70.80 dollars.

"The Iran sanctions are likely to fuel speculation of tighter global supply, while heightened geopolitical tensions in the Middle East may fan fears of potential supply disruptions", he said.

The group also raised its forecast for oil supplies from non-members as USA production continues to surge, warning that the global economic growth outlook has become uncertain, in part due to United States trade policy and sanctions on Russian Federation and Iran.

While Iran has given European nations a two-month window in which to guarantee that the nuclear deal will remain intact, the U.S.'s hawkish national security adviser John Bolton said Sunday that the U.S.is prepared to impose sanctions on European companies if their governments don't heed President Trump's demand to stop dealing with Iran.

Capital Economics analysts said OPEC is well-positioned to offset any fall in output from Iran caused by the re-imposition of sanctions on the country.

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