Monday , August 26 2019

Oil leaps to 6-month high as US vows to choke Iran exports


Crude leapt to its highest level in almost six months after the Trump administration said it wouldn’t renew Iran oil waivers for China, India and other countries once they expire in May.
Futures in London traded near $74 a barrel after jumping as much as 3.3 percent and reaching the highest since early November in anticipation of the statement
on Monday.
US Secretary of State Mike Pompeo said the Trump administration will no longer grant exemptions on waivers and the US, Saudi Arabia and the United Arab Emirates will ensure an “appropriate supply” of oil. The current set of waivers — issued to China, Greece, India, Italy, Japan, South Korea, Taiwan and Turkey — expires on May 2.
Benchmark Brent has gained more than 30 percent this year as the Organization of Petroleum Exporting Countries and its allies including Russia continued their commitment to curb output in a bid to avert a glut. US sanctions on Iran and Venezuela, along with unexpected losses in Libya, have squeezed supplies further.
Saudi Energy Minister Khalid Al-Falih said his nation will coordinate with fellow oil producers to ensure adequate supplies are available to consumers while ensuring the global oil market “does not go out of balance.”
Brent for June settlement climbed $1.90 to $73.87 a barrel in New York on the London-based ICE Futures Eur- ope exchange. It earlier rose to $74.31, the highest intraday level since November 1.
West Texas Intermediate for May delivery advanced $1.48 to $65.48 a barrel on the New York Mercantile Exchange, while the more-active June contract rose by $1.53 to $65.60. WTI traded at a discount of $8.26 to Brent for the same month.
Oil-company stocks also benefited, with Pompeo noting that surging American production will help replace any lost Iranian supply. The S&P 500 Energy Index rose 1.2 percent, with gains led by US-based drillers Marathon Oil Corp and Diamondback Energy Inc. Gasoline futures rose as much as 3.2 percent, reaching the highest intraday price since early October.
The decision to not extend waivers comes after National Security Adviser John Bolton and his allies argued that US promises to get tough on the Persian Gulf state were meaningless with the exemptions still in place.
The total elimination was a stricter move than many investors had expected, said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. The ultimate impact likely depends on how hard the Saudis work to fill the gap, he said – and how President Donald Trump reacts if the crackdown starts to affect US consumers.

About Admin

Check Also

Etisalat Freedom customers get free data upgrade

Abu Dhabi / Emirates Business Etisalat announced the launch of its double data offer providing ...

Leave a Reply

Your email address will not be published. Required fields are marked *