Oil prices fell on Friday as rising inflation in the United States stoked fears of a big interest rate hike as investors awaited the outcome of nuclear talks between the United States and Iran that might increase global supply of crude.
Brent crude futures were down 58 cents, or 0.6 percent, at $90.83 a barrel by 0730 GMT, while West Texas Intermediate crude was down 45 cents, or 0.5 percent, at $89.43 a barrel.
Oil prices are also heading for their first weekly decline following posting gains for seven consecutive weeks, despite the fact that both Brent and US crude rose earlier to their highest level in seven years.
“Yesterday’s inflation data is likely to put more pressure on the US Federal Reserve to raise interest rates,” said Warren Patterson, head of commodity research at ING. This expectation weighs on oil and on commodities in general to some extent.”
The Organization of the Petroleum Exporting Countries (OPEC) said global oil demand might rise further this year. OPEC expects an increase in demand of up to 4.15 million barrels per day this year, as the global economy records a strong recovery from the pandemic.
Iran’s exports
In addition, estimates of companies that track the movement of oil shipments showed that Iranian oil exports rose to more than one million barrels per day for the first time in nearly three years, following the increase in shipments to China.
Iran’s oil exports have shrunk since former US President Donald Trump withdrew in 2018 from the 2015 nuclear deal and reimposed sanctions aimed at curbing oil exports and related revenues that go to Iranian government coffers.
Iran has kept some exports flowing despite the sanctions by hiding the origin of imports by middlemen. And tanker tracking companies say China was the destination for most of those shipments.
The administration of President Joe Biden discussed the issue of Iranian imports with China, but did not impose sanctions on Chinese personalities or companies. Beijing has urged the United States to lift sanctions on Iran, which China is vocal regarding its opposition to.
Indirect talks between Iran and the United States resumed on Tuesday to revive the nuclear deal. If the talks succeed, Iran can resume oil sales in the open market.
According to estimates of consultants and analysts in the oil industry, Iran managed to increase exports in 2021 despite the sanctions. But those exports are still well below the 2.5 million barrels per day that were shipped before the reimposition of sanctions, and Petro-Logistics, which specializes in tracking oil shipments, said Iranian crude exports rose in December to more than one million barrels per day, higher It has been at its level for nearly three years, although it fell to regarding 700,000 barrels per day in January.
“We don’t expect to see 1 million barrels per day exported steadily until there is a change in the political arena,” said Daniel Gerber, the company’s chief executive.
A senior trade source said January shipments were down regarding 300,000 bpd compared to December, adding that shipments volumes were fluctuating due to a shortage of ships.
The increase in Iranian exports came as global supply shortages helped push oil prices to a seven-year high of $94 a barrel. Lifting US sanctions would theoretically allow Iran to start returning crude exports at around 2.5 million barrels per day, a rate not seen since 2018.
In response to a question regarding China’s imports of Iranian oil, the Chinese Foreign Ministry spokesman’s office said, “The international community, including China, is cooperating normally with Iran under the international legal framework, which is logical and legitimate.”
performance of the week
On Thursday, oil prices were flat, as markets considered the impact of a potentially sharp and unexpected interest rate hike on increased energy demand.
After rising more than one percent in early trading, Brent crude futures only rose 14 cents, or 0.15 percent, to reach $91.41 a barrel.
As for US crude futures, they rose 22 cents, or 0.3 percent, to settle at $89.88 a barrel, following rising two dollars earlier in the day. Today’s data showed that inflation in the United States rose to its highest level in 40 years.
Oil prices were stable at around $90 a barrel on Wednesday, but the prospect of increased supplies from Iran and the United States kept prices under pressure. The price of Brent crude futures fell 36 cents, or 0.4%, to $90.42 a barrel during trading. West Texas Intermediate crude fell 43 cents, or 0.4%, to $88.93 a barrel. The two benchmarks fell 2% on Tuesday, as Washington resumed indirect talks with Iran on reviving the 2015 nuclear deal.
A deal might lead to the lifting of US sanctions on Iranian oil exports and the rapid addition of supplies to the market, but there are still unresolved issues.
The markets were also affected by the latest monthly report from the US Energy Information Administration, which raised its forecast for US crude production to 11.97 million barrels per day on average this year.
US stocks of crude, gasoline and distillates fell last week, according to market sources citing data from the American Petroleum Institute.
(Archyde.com)
