US
allowed eight countries — including China, India, Italy, Greece, Japan,
South Korea, Taiwan and Turkey — to continue to import oil despite
reimposition of nuclear related sanctions on the Islamic Republic from
November last year.
In May, the US
government is expected to take a decision whether it will continue with
the exemptions policy or stop the eight countries from importing Iranian
oil.
“The US administration may
extend the waivers granted to 8 countries that rely heavily on imports
of crude oil from Iran if oil prices continue to rise in the next two
months to over $70 per barrel,” said Garbis Iradian, Chief Economist for
MENA at Washington based Institute of International Finance (IIF), told
Gulf News.
US President Donald Trump also expressed concern over the rising oil prices in a tweet on Thursday.
Currently
international benchmark Brent is trading at $67.58 per barrel, up by
0.72 per cent. US crude West Texas Intermediate, on the other hand is at
$60.14 per barrel, up by 1.42 per cent.
Oil
prices are trending higher on the back of production cuts by Opec and
its allies and US sanctions on Iran as well as on Venezuela.
Opec+ will meet in May to decide whether the production cut should continue in the second half of 2019.
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“The
range of unknowns surrounding Opec and US production levels on the one
hand, and the pace of growth in global oil demand on the other, pose a
major challenge to projecting oil market balances and price expectations
in the short-term.”
Ole Hansen,
head of commodity strategy at Saxo Bank also said the biggest risk to
oil is renewed worries about global growth and demand.
“This
focus, however, will be kept down as long global stocks continue to
rally like they did this past week on renewed trade deal and rate cut
hopes.”
“Opec and Russia are for
various reasons very unlikely to reverse the current course of keeping
production tight. The Q4 collapse last year occurred after Opec, led by
Saudi Arabia, ramped up production in the belief that Iranian exports
would collapse. Instead they were wrong-footed by Trump’s waivers which
helped trigger the December collapse.”
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