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Oil at $100 is a possibility next year, Bank of America says

12 Mai 2018

It's not often that an OPEC producer accuses the USA of driving up oil prices. The price action on crude from the OPEC announcement in December 2016 to today did jump from $45.23 to $71.05, or about a 60 percent gain. Thereby, sparking anxieties about a fresh tension in the Middle East and global oil supplies.

U.S. President Donald Trump had until May 12 to issue a waiver on oil-related sanctions or move against the principles of the JCPOA.

Iran's oil exports were down by around 1 million barrels per day under sanctions before the 2015 deal was reached.

But the impact may be less "severe" this time around, according to Capital Economics analyst Thomas Pugh.

“We expect that Iranian exports will fall well before the 180-day period until oil sanctions will be in effect, similar to the 2012 sanctions. The West of England Club said any activity would have to stop the moment any entity that's dubbed a Specially Designated National by the U.S. Treasury's Office of Foreign Assets Control is re-added to a secondary sanctions list.

"Saudi Arabia may be able to start increasing oil production at a time when oil prices are already high".

When the USA imposed sanctions on Iran in 2012, accompanying European measures also restricted the International Group - which is based in London - from providing cover for Iranian shipments. Already playing catch-up after being caught off-guard by the speed and unconventional nature of recent US and South Korean diplomacy with North Korea, Japan is simultaneously pursuing a permanent exemption to President Trump's planned aluminum and steel tariffs. The European Union, meanwhile, is considering a so-called "blocking statute" that would ban any EU company from complying with the USA sanctions. In the United States, the Energy Information Administration reported nationwide crude inventories slid 2.2 million barrels last week, in contrast to a forecast for a 1 million-barrel gain in a Bloomberg survey. While we have not gone straight up from the lows our long-term price targets for oil have hit.

Since then, The Energy Report has had a long-term bullish outlook on oil after previously calling the break down in price before the OPEC production war. The International Energy Agency said restoring sanctions on Iran, the world's fifth-largest oil exporter, "may have implications for the market balance". So far, the cartel has not communicated any increase in future supply in response to Iranian sanctions.

Where else in the world bears watching for energy investors? US Vice President Mike Pence called on Venezuela this week to suspend its "sham" presidential election, set for May 20. $90 or $100 oil "may again be in the cards", Fesharaki wrote.

Elsewhere, the market is expecting a seasonally strong summer for USA production.

Extra supplies from the Organization of Petroleum Exporting Countries, meanwhile, are short because of an agreement to limit production to erase a previous surplus.

Neither the Trump administration nor Saudi Arabia will want to be blamed for driving oil prices significantly higher.

Barclays does not see a significant impact on the oil market either. "Demand is outstripping supply", he said.

Oil at $100 is a possibility next year, Bank of America says