Rising global economic growth prospects have pushed up world oil prices. But the outbreak of the Corona virus in some of the world’s largest industrial cities and the closure of trade routes and some businesses have caused fears of a return to the crisis to cast a shadow over some of the world’s major cities again. In addition, due to the Iran-US nuclear talks, there has been a threat in the global energy markets that Iran will supply a large amount of its oil to the market and disturb the proportion of oil prices in the markets. If the continuation of this topic is interesting for you, we suggest that you do not miss this analytical note from Artan Press.
*** Rising oil prices on the New York Stock Exchange
New York Mercantile Exchange fell 3.8% in broad markets, declining in terms of trading volume. However, oil prices have been supported because in many parts of the world the situation is stable and many industrialized countries are planning to start with power. The same trend has caused the International Monetary Fund to change its cautious view of global growth, and we will see a change in the global economy’s quarterly growth trend over the next three months.
*** Balance in global oil pricing
Bill O’Grady, executive director of Confluence Investments in St. Louis, recently acknowledged that “we have reached some equilibrium” and that the market is at a balance point in supply and demand. To maintain the gains, we must see the economy peak and energy demand increase, and he believes the energy market will pass very ideal conditions in the coming months.
*** The oil market is dominated by the Corona pandemic
Crude oil rose on Monday amid a resurgence of the coronavirus outbreak in Europe and an imminent rise in heavy oil supplies as OPEC Plus green factories wait to see oil prices fall. And the outbreak of the crisis will disrupt energy distribution in Europe. If the nuclear deal with Iran is revived, price inflation is likely to increase. Multilateral talks began in Vienna on Tuesday, although analysts say the chances of success are slim. But there is a possibility that the balance in the energy markets will be upset.
*** Unprecedented rise in oil prices in the first three months of the year
Oil recorded a 22% price increase in the first quarter of this year. Because vaccines boost optimism that demand will rise again, while the Organization of Petroleum Exporting Countries and its allies have had tight control over supply. While consumption improvements are increasing in countries like the United States, the global leap is still shaky. In India, state-owned refineries are looking to buy less crude oil from Saudi Arabia as the crisis situation in India is assessed as dire. On the other hand, trade relations between India and Saudi Arabia are in a state of ambiguity due to the irrational prices of energy carriers.
*** Decreased supply side support; equilibrium price in the energy market
As supply-side support diminishes, marginal price action in oil markets now shifts to demand dynamics, without supply-side reductions in production rates or pauses in price correction. One of the reasons that makes the state of world trade unpredictable in the current situation is the inability of economists to map the state of the economy in the next nine months. While the demand outlook is expected to improve significantly by the second half of the year and should stabilize markets, short-term energy trading markets will be volatile and their trading risks will be high for both sides. Will go.
*** Intermittent drop in world oil prices
Oil fell to about $ 2.6 a barrel on April 5, reaching $ 62.27 a barrel. India, the world’s third-largest oil consumer, is witnessing an unprecedented rise in the number of coronas, which will affect oil prices in the coming days. Iran is witnessing continued growth in oil exports to China, and the market is worried about Iran’s excess oil supply after the return of the United States to Borjam. The UK has said it will continue to restrict passenger entry from other countries until the corona is restrained around the world, despite the improvement in the corona.
*** Concerns about OPEC Plus oil supply
The market is slightly worried about the excess oil supply due to the growth of supply of 350 thousand barrels per day by OPEC Plus countries from May, which over time will increase to 2 million barrels per day. The first talks on Iran’s nuclear program, involving the United States since Joe Biden’s presidency, will be complicated by the inability of Tehran diplomats to speak directly to the Americans. These are just some of the factors that can affect the oil market, and the rise in oil prices is even heavier to date.
*** Possibility of returning Iranian oil to the sales circuit
The possibility of the return of Iranian oil barrels continues to weigh on global energy trading signals. Iran’s foreign ministry said in a statement on Tuesday that the first round of talks on a nuclear deal ended with the parties agreeing to continue expert-level consultations. But there is reason for hope in the United States, according to the Energy Information Administration, although hopes are not yet close to those of the previous period.
*** Decreased US crude oil reserves
According to a Bloomberg poll, US crude stockpiles are expected to decline last week. The American Petroleum Institute, which is funded by the industry, released inventory information late Tuesday ahead of the stock figures.
The EIA will report weekly on Wednesday. Iran says it needs the United States to lift all sanctions imposed by Donald Trump, who pulled the United States out of the deal, in order to reduce its default obligations under the 2015 agreement.
*** Iran-US conflict and oil shocks
Biden’s White House says it can not make any “unilateral move” and urges Tehran to join the deal. These political movements are considered very risky for the world oil market because the outcome of the Iran-US negotiations alone can displace 30% of the world oil price. Each side expects the other to do something first, and yet neither is willing to take the first step.
*** Iran-US talks and rising global oil prices
Oil jumped again before talks on reviving Iran’s nuclear deal, and this was reflected in commodity prices. Oil rose 22% in the first quarter as vaccines boosted optimism that demand would rise again, while the Organization of Petroleum Exporting Countries and its allies had tighter controls on supply. Although fluctuations in virus waves have increased in recent weeks in some countries, prices have also been controlled by a wealth of positive economic data from the United States.
*** Brokers forecast oil price growth
Given that banks have a positive outlook for the oil market as summer approaches in the Northern Hemisphere, the gradual return of OPEC Plus equipment to the oil industry will reduce global reserves in the second quarter, leading to rising market prices. Oil will lead.
Nevertheless, the potential for the return of Iranian barrels continues to weigh on emotions. Negotiators from the Islamic Republic and the United States are working to revive the troubled nuclear deal, although negotiations face significant obstacles. Tehran insists on lifting sanctions altogether to reduce its nuclear activities, while Washington has ruled out any “unilateral move.” However, financial brokers predict that in the short term there will be no change in the political process and in practice the oil market will not be much affected by the news shocks related to Iran.
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