Published: Sun, April 14, 2019
Economy | By

Oil markets tightening due to U.S. sanctions: IEA

Oil markets tightening due to U.S. sanctions: IEA

Oil prices rose 1 percent on Friday as involuntary supply cuts from Venezuela and Iran plus conflict in Libya supported perceptions of a tightening crude market, while upbeat Chinese economic data eased concerns about waning crude demand.

OPEC's largest producer Saudi Arabia saw its output dropping to its lowest in over two years, boosting compliance with supply cuts to 153%, according to the IEA's Oil Market Report.

Crude futures rose again on Friday, heading for a sixth-straight week of gains, as threats of a wipeout in Libyan crude supply bolstered an already squeezed market.

The International Energy Agency said on Thursday that Venezuelan crude production has dropped below 1 million bpd to 870,000 bpd due to us sanctions, and Iranian supply could fall further after May if Washington tightens its sanctions against Tehran, as many experts anticipate.

"Clearly, oil prices at $70/bbl for Brent, are less comfortable for consumers than they were at the start of the year and the IEA has regularly warned of the dangers of prices rising even higher". Demand is expected to grow by 1.4 percent per day.

Saudi Arabia can add more oil to the market without adjusting production quotas since the kingdom's output in March was some 500,000 bpd below its OPEC target, the source added.

US oil giant Chevron Corporation said on Friday it will buy Anadarko Petroleum Corporation in a stock and cash transaction valued at 33 billion USA dollars to bolster its position in shale and the liquid natural gas market.

Meanwhile, the latest EIA report showed that the United States crude inventories rose 7 million barrels to 456.6 million barrels in the last week, their highest since November 2017.

The rig count fell for the past four months as independent exploration and production companies cut spending on new drilling to focus on earnings growth instead of increased output.

In February, the oil reserves of the OECD countries remained at 16 million barrels above the five-year average.

Iraq's production fell marginally to 4.52 million bpd in March, slightly above its quota of 4.51 million bpd, according to OPEC secondary sources.

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