Oil briefly hit $80 for the first time since 2014

Friday, 18 May, 2018

The oil market is experienced the full force of the Iran sanctions and shipping is next in line.

The brokerage also said that USA energy intensity "continues to decrease which is never good news for the future consumption of oil".

In addition, the high oil prices prompted the IEA to increase supply growth estimates for non-OPEC member producing countries, particularly the U.S.

So far this year, China has lived up to these expectations.

USA crude output has soared 27 percent in the last two years to a record 10.72 million barrels per day, putting it within reach of top producer Russia's 11 million bpd.

The agency added that developing nations that phased out fuel subsidies when prices were lower are especially sensitive to the high prices; it also noted that the "effect of higher prices should in particular become apparent in gasoline demand in the next few months".

The call on OPEC crude and stocks will average around 32.25 mb/d for the remainder of 2018, almost 0.6 mb/d higher than April output, according to the report.

US crude stockpiles slipped for a second week as the summer driving season approaches, government data showed Wednesday.

Iran exported a total 2.6 million bpd of crude in April, a record since the lifting of sanctions in January 2016, according to the news service for the country's oil ministry.

Exports hit a new one-week record, the EIA said. "In this particular case however, an overwhelming spike in the price of crude oil could act counter to this logic, choking the demand growth in trade rather than being a forbearer of the reverse", Allied's analyst concluded. An EIA report Thursday revealed a weekly rise in US supplies of the commodity that was generally in line with market expectations.

Market ripples from Venezuela's economic distress and President Donald Trump's decision this month to exit a joint sanctions deal on Iran's nuclear programme have pushed prices higher.

Iran's oil buyers continue to buy its crude, assessing the implications of the sanctions during the 180-day wind-down period. The OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Zafiro (Equatorial Guinea), Rabi Light (Gabon), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE), and Merey (Venezuela).

"Strong global demand, an ongoing OPEC supply deal, and a rising tide of geopolitical risk all combine to force the market higher", said Robbie Fraser, commodity analyst at Schneider Electric.