Iran issues oil warning as UAE says production can rise

Global Stock Markets

Iran issued a new warning over Mideast oil supplies as the United Arab Emirates said on Tuesday it could increase its own production, the latest remarks to follow President Donald Trump's demand for lower global energy prices. 

The comments by Iranian President Hassan Rouhani and the unexpected announcement by the UAE's oil-rich capital Abu Dhabi came as US benchmark crude traded around $75 a barrel.

A recent decision by the Organization of the Petroleum Exporting Countries to increase the cartel's own production by 1 million barrels a day has yet to tamp down prices. That's led to higher prices at gasoline pumps in the United States as it heads toward midterm elections for Congress.

Speaking to Iranian expatriates Monday night in Switzerland, where he was on an official visit, Rouhani took aim at America.

The US pulled out of the Iran nuclear deal in May and initially said it wanted allies to stop buying Iranian crude entirely. The State Department said Monday it would examine waivers on a "case-by-case basis'' as it re-imposes sanctions.

Rouhani did not elaborate, but Iran long has asserted it could shut down the Strait of Hormuz, the narrow body of water that separates the Persian Gulf from the wider world. A third of all oil traded by sea passes through the strait and the US Navy regularly has direct, tense encounters with Iran's paramilitary Revolutionary Guard there.

The US Navy's 5th Fleet, which patrols the region, has said it has not seen any ``unsafe and unprofessional'' actions by Iranian naval forces in the Persian Gulf since August 2017. It did not immediately respond to a request for comment Tuesday over Rouhani's remarks.

Separately, Iran's interior minister Abdolreza Rahmani Fazli warned Tuesday that ``if we close our eyes for 24 hours, 1 million refugees will go toward Europe through our Western borders'' via Turkey. Some 5,000 tons of narcotics also could be smuggled to the West, he added, according to the semi-official .

Iran lies on a major trafficking route between Afghanistan and Europe, as well as the Persian Gulf states. Large drug seizures are common across the region.

Meanwhile, the state-run Abu Dhabi National Oil Co. issued a surprise statement Tuesday saying it has an oil production capacity of 3.3 million barrels per day. It added that it ``remains on track to increase its production capacity to 3.5 million (barrels per day) by the end of 2018.''

The company also said it ``has the ability to increase oil production by several hundred thousand barrels of oil per day, should this be required to help alleviate any potential supply shortage in the market.''

The oil company previously announced in November it had plans to expand its capacity to 3.5 million barrels of oil per day. It produced some 2.8 million barrels of oil per day in May, according to the most recent figures released by OPEC.

Oil prices climb up amidst Venezuela & Iran supply worries

Oil Stock Markets

Oil prices rose on Tuesday on concerns that Venezuela’s crude output could drop further following a disputed presidential election and potential U.S. sanctions on the OPEC-member. 

The United States also toughened its stance on Iran and made a list of sweeping demands, which could further curb the country’s crude oil exports and boost oil prices.

Brent crude futures LCOc1 were at $79.39 per barrel at 0226 GMT, up 17 cents, or 0.2 percent, from their last close. Brent broke through $80 for the first time since November 2014 last week.

U.S. West Texas Intermediate (WTI) crude futures were at $72.47 a barrel, up 23 cents, or 0.3 percent.

Venezuela’s socialist President Nicolas Maduro faced widespread international condemnation on Monday after his re-election in a weekend vote his critics denounced as a farce cementing autocracy in the crisis-stricken oil producer.

The United States is actively considering oil sanctions on Venezuela, where output has dropped by a third in two years to its lowest in decades.

Concerns that looming U.S. sanctions on Iran will curb that country’s crude exports have also been boosting oil prices in recent weeks.

The United States on Monday demanded Iran make sweeping changes - from dropping its nuclear programme to pulling out of the Syrian civil war - or face severe economic sanctions as the Trump administration hardened its approach to Tehran.


Elsewhere, Washington and Beijing both claimed victory on Monday as the world’s two largest economies stepped back from the brink of a global trade war and agreed to hold further talks to boost U.S. exports to China.

Growing production of shale oil could curb oil prices eventually and widen the price spread between WTI and Brent crude oil, said Nunan.

Oil prices firm amid Iran sanctions and OPEC cuts

Oil Stock Markets

Oil prices held firm on Tuesday as ongoing production cuts by OPEC and looming U.S. sanctions against Iran tightened the market amid strong demand. 

Brent crude futures LCOc1, the international benchmark for oil prices, were at $78.37 per barrel at 0028 GMT, up 14 cents from their last close and not far off a three-and-a-half year high of $78.53 a barrel reached the previous session.

U.S. West Texas Intermediate (WTI) crude futures were at $71.09 a barrel, up 13 cents and also not far off their Nov. 2014 high of $71.89 a barrel reached last week.

Markets have generally tightened as the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, have been withholding supplies since 2017 in order to push up oil prices.

With renewed U.S. sanctions looming against OPEC-member Iran and oil demand strong, analysts said crude prices were well supported.

The tightening market has all but eliminated a global supply overhang which depressed crude prices between late 2014 and early 2017.

OPEC figures published on Monday showed that oil inventories in OECD industrialized nations in March fell to 9 million barrels above the five-year average, down from 340 million barrels above the average in January 2017.

Gold Firms As Dollar Rally Pauses, Geopolitical Tensions Simmer

Gold edged higher on Thursday as the dollar paused for breath, holding near its 2018 peak, with investors focused on U.S. inflation data due later and simmering tensions between the United States and Iran.

The dollar slipped slightly from a 4-1/2 month peak hit as long-term U.S. Treasury yields held near the psychologically important 3 percent level. A strong dollar makes dollar-priced gold costlier for non-U.S. investors.

U.S. President Donald Trump on Tuesday withdrew the United States from an international nuclear accord with Iran, raising the risk of conlfict in the Middle East and increasing the appeal of safe-haven assets such as gold.


Turner added, however, that the dollar was the main driver for gold and he expects the precious metal to come under pressure in the near term, with the dollar extending its rally.

Spot gold rose by 0.2 percent to $1,315.28 an ounce by 0959 GMT. U.S. gold futures for June delivery were also up 0.2 percent at $1,315.50.

U.S. consumer prices data due at 1230 GMT is expected to show that annual core CPI inflation rose to its highest in more than a year in April, strengthening the case for the Federal Reserve to raise interest rates.

After reduced growth data in the euro zone and Britain in recent weeks, the Fed remains the only major central bank that appears to be on course for rate increases.

Elsewhere, North American gold-backed exchange-traded funds registered inflows in April at their highest level since September 2017, with safe-haven purchases ushered in by a trade stand-off between the United States and China, Syria tensions and worries about possible U.S. sanctions on Russia.

After Trump’s announcement on the U.S. withdrawal from the Iran nuclear deal, Israel said on Thursday that it had attacked nearly all of Iran’s military infrastructure in Syria after Tehran fired rockets at Israeli-held territory for the first time.

Spot gold looks neutral in a range of $1,302-$1,317 an ounce, said Reuters technical analyst Wang Tao.

In other precious metals, silver gained 0.6 percent to $16.59 an ounce after hitting a two-week high at $16.62 in the previous session.

Platinum rose 0.9 percent to $918.20 while palladium edged up by 0.1 percent to $975.72.

Oil prices soars to multi-year highs as traders adjust to renewed US sanctions

Oil Stock Markets

Oil prices clocked up to highest in years on Thursday as marketers adjusted to the prospects of renewed U.S. sanctions against major crude exporter Iran amid an already tightening market. 

The United States plans to impose new sanctions against Iran, which produces around 4 percent of global oil supplies, after abandoning an agreement reached in late 2015 which limited Tehran’s nuclear ambitions in exchange for removing U.S.-Europe sanctions.

Oil prices rose sharply in response to the announced measures.

Brent crude futures, the international benchmark for oil prices, hit their strongest since November 2014 above $77.80 per barrel at 0421 GMT on Thursday.

U.S. West Texas Intermediate (WTI) crude futures also marked a November-2014 high, at $71.75 a barrel at that time.

In China, which is Iran’s single biggest buyer of oil, Shanghai crude futures posted their biggest intra-day rally since their launch in March, rising more than 4 percent to a dollar-denominated record of around $73.40 per barrel.

Analysts had little hope that opposition to the U.S. action would prevent sanctions from going ahead.

U.S. bank Goldman Sachs said renewed sanctions and risks to supplies elsewhere, especially in Venezuela, meant there was a high possibility of higher prices than the bank’s summer Brent price forecast of $82.50 per barrel.

The threat of new sanctions come amid an oil market that has already been tightening due to strong demand, especially in Asia, and as top exporter Saudi Arabia and top producer Russia have led efforts since 2017 to withhold oil supplies to prop up prices.

U.S. crude inventories fell by 2.2 million barrels in the week to May 4, to 433.76 million barrels, according to the Energy Information Administration (EIA), slightly above the 420 million barrels five-year average level.

One factor that could prevent markets from tightening further is soaring U.S. oil output.
“Higher prices are more than likely to be capped as...U.S. shale producers turn the taps back on the longer prices remain above break-evens,” said Kerry Craig, global market strategist at J.P. Morgan Asset Management.

Weekly U.S. crude oil production hit another record last week, climbing to 10.7 million barrels per day (bpd).

That’s up 27 percent since mid-2016 and means U.S. output is creeping ever closer to that of top producer Russia, which pumps around 11 million bpd.

Trump Exit From Iran Pact Halts $40 Billion Boeing, Airbus Deals

Global Stock Markets

The U.S. withdrawal from a nuclear accord with Iran slams shut what had been a brief opening for historic aircraft sales by Boeing Co. and Airbus SE to the Islamic Republic.

President Donald Trump’s announcement that the U.S would seek to reimpose sanctions left little hope that the planemaking duopolists will be able to consummate $40 billion in aircraft deals struck by Iranian carriers during the brief trade thaw. Both companies’ export licenses to Iran will be revoked, Treasury Secretary Steven Mnuchin told reporters.

The plane orders, badly needed to upgrade the Islamic Republic’s museum-vintage airliners, would have had the potential to build Tehran into an aviation hub that could better compete with Dubai and Qatar, the region’s aviation super powers.

They also represent a lost opportunity for Chicago-based Boeing and Toulouse, France-based Airbus. The European planemaker is subject to U.S. export restrictions to Iran because more than 10 percent of the parts on its jets originate with U.S. companies such as United Technologies Corp., Rockwell Collins Inc. and General Electric Co.

Airbus said it will “carefully analyze” the implications of the U.S. withdrawal from the nuclear deal with the Islamic Republic before deciding how to proceed. “This might take some time, ” a spokesman for the company said by email.
Boeing Response

While the Obama administration had licensed the sales by both Airbus and Boeing to Iran Air in late 2016, the planemakers handled the orders very differently. Airbus recorded the sales in its order backlog and delivered three jets, while its ATR venture shipped eight turboprops.

Boeing never closed its transaction with Iran Air, and downplayed the historic deal’s prospects after Trump took office. In recent months, the largest U.S. exporter had quietly lined up other customers for some of the 777-300ER jetliners once intended for Iran Air this year.

Airbus has 95 undelivered planes bound for Iran Air in its backlog. They include 16 crucial orders for its biggest A350 wide-body and 28 for its yet-to-be-delivered A330neo. Another 12 smaller turboprops manufactured by ATR, are still due to be delivered to Iran’s national flag carrier.

Investor reaction was muted since Trump had long been critical of the nuclear pact. Boeing shares dipped less than 1 percent to $338.49 at the close of trading in New York, while Airbus shares were little changed in Paris.

Other manufacturers said they were reviewing the U.S. decision and emphasized their compliance with export controls

Dollar at 6-day high against Yen with Iran Uncertainty pushing US yields up

Asian Stock Markets

The dollar rose to a six-day high against the yen on Wednesday as crude oil prices rallied and pushed Treasury yields higher after U.S. President Donald Trump pulled out from an international nuclear deal with Iran. 

The greenback also gained on the euro as concerns about Italian political turmoil hurt the common currency.

The dollar was 0.3 percent higher at 109.480 yen after touching 109.640, its highest since May 3.

The dollar index against a basket of major currencies was marginally higher at 93.206.

The U.S. currency was lifted as long-term Treasury yields climbed to two-week peaks with crude oil prices surging more than 2 percent to their highest since November 2014.

The 10-year Treasury note yield was about 2 basis points higher at 2.989 percent. A rise above 3.035 percent scaled on April 25 would take it to its highest since early 2014.

Trump on Tuesday pulled the United States out of an international nuclear deal with Iran, raising the risk of conflict in the Middle East, upsetting European allies and casting uncertainty over global oil supplies.

The euro lost 0.05 percent to $1.1857 after sliding as low as $1.1838 overnight, its weakest since Dec. 22.

The common currency, already under pressure from weak economic indicators and widening U.S.-euro zone interest rate differentials, was also hit by political developments in Italy.

Italian President Sergio Mattarella’s call to bickering political parties to rally behind a “neutral government” was met with immediate opposition and raised the prospect of elections as early as July.

The euro was 0.25 percent higher at 129.830 yen after plumbing a six-week low of 129.240 on Tuesday. It was on track to end a seven-day losing run.

Sterling traded at $1.3533 following a decline to a four-month low of $1.3485 overnight.

The pound has fallen heavily in recent weeks on expectations the BoE would not, as earlier believed, tighten monetary policy because of a relatively weak economy and as investors piled into a rallying dollar.

The Australian dollar extended its overnight slide to touch an 11-month low of $0.7424.

Pressured by the dollar’s broad strength, the Aussie has slid despite an upbeat budget from the country’s government.

The New Zealand dollar was little changed at $0.6968.

The Reserve Bank of New Zealand is widely expected to stand pat on monetary policy when it meets on Thursday but the event was still approached with anticipation as it will be the first under new Governor Adrian Orr.

Oil prices slides lowe amongst concerns about Iran supplies

Oil Stock Markets

Oil prices edged lower on Friday, but Brent largely held its gains from the previous session amid concerns that Iran may face renewed sanctions, choking off supply.

Global benchmark Brent crude futures LCOc1 were down 29 cents, or 0.4 percent, at $74.45 a barrel by 0302 GMT, after rising 1 percent on Thursday

U.S. West Texas Intermediate (WTI) crude CLc1 fell 28 cents, or 0.5 percent, to $67.91 a barrel. The contract gained 0.2 percent the previous session.

Brent is heading for a third week of gains, up by 0.5 percent, while WTI is set to drop 0.7 percent for the week.


U.S. President Donald Trump will decide by May 12 whether to re-impose sanctions on Iran that were lifted after an agreement over its disputed nuclear program, which would probably result in a reduction of Iranian oil exports.

Brent has gained 5.9 percent this month on expectations the United States will renew sanctions.
Concerns about market tightness have also been fueled by the deteriorating political and economic situation in Venezuela that has led to a 40 percent decline in crude output in the past two years.

Nonetheless, further gains have been capped by rising U.S. production as shale drillers ramp up activity in tandem with the rise in oil prices.

Surging U.S. production, which rose to 10.59 million bpd last week, has encouraged record-high U.S. exports.