The oil market was looking for a spark to improve the situation of the Quid 19 epidemic in order to start the upward trend, and with the good news that has been spread in the world about the distribution of vaccines, we can imagine a positive outlook for this global market. The reason for the considerations is that it is usually traded at rates lower than the world rate. But the report on Iran’s oil sales in the last three months is acceptable and shows that Iran has been able to maintain its oil economy despite all sanctions. We suggest you follow this note from Artan Press to the end.
*** Stunning growth in oil prices around the world
The trading price of oil in all world markets is growing at an astonishing rate, and the main reason is the return of demand from industrial and manufacturing companies to conditions that can in the next step return to normal before the epidemic. With the speed at which oil prices have risen, a change in the prices of petrochemical and polymer products is inevitable. This is true in all world markets, and we anticipate that stocks such as refining stocks or stocks such as the first refining will be fundamentally good in the coming months in the Iranian stock market.
*** Domino growth in global oil demand
Demand in the market usually grows in a domino effect. The escalation in the oil market is clearly visible. Economic actors in this field should be aware that in the last two weeks, demand has exceeded supply, the output of which has been competition for purchase. It is enough to look at the Iranian energy exchange and see that oil prices in the energy exchange have been accompanied by positive emotions. In the current situation, with the high price of the dollar, it is very attractive and tempting to enter the remaining markets such as oil.
*** Iranian oil production indicators in normal condition
Iran has no problem in terms of oil extraction, and on the other hand, the dollar sales of this commodity are well underway. The dollar exchange rate will continue to be the most important factor in determining the price of products until Eid night, so the actors in this industry need to take into account the risks associated with this issue and make detailed analysis of their purchases or sales. Preliminary estimates indicate that in the month In the past, Iran exported about 800,000 to 1 million barrels per day of crude oil and condensate, mostly to China.
*** Strong connection of the oil market with the nuclear negotiations
Iran’s oil market is heavily dependent on possible US-Iranian talks, and any decision on nuclear talks could make the prospects for the energy market clearer. Recently, the US President announced his position on interaction with the Iranian side regarding the nuclear talks. US President Joe Biden has said Iran should return its nuclear stockpiles to the level specified in the agreement, while Tehran says Washington should show goodwill by withdrawing from tougher sanctions imposed by Donald Trump. Given these trade-offs with the United States, it is unlikely that Iran will be able to experience the conditions in the short term, and conditions for world-class sales of Iranian oil cannot be imagined, at least in the short term.
*** IRA has no plans to reduce production
In the current situation, Iran does not intend to reduce production, because joint trips with Saudi Arabia and Iraq will be monopolized by these Arab countries if Iran does not work, and this is not pleasant for Iran at all. The government has recently instructed domestic oil operators to focus their operations mainly on the Azadegan and Karun Gharbi fields. Crude oil production capacity before the embargo was about 4 million barrels per day. But in the current situation, it has reached less than half of this nominal amount.
*** Predict ten percent growth in oil prices
But what will be the outlook for oil prices in the coming days? It is predicted that the process of buying and selling oil will be accompanied by the success of customers around the world. We are in a situation where markets all over the world are thirsty for demand and the oil market is no exception. While most forecasts put the average oil price at $ 55 in 2021, the oil price rally last week boosted Brent to more than $ 60 a barrel, the highest level in 15 months (2018). Is.
*** Brent oil on the way to continued price growth
After Brent oil price crossed $ 62 a barrel on February 10, market participants technically expect this increase to reach $ 65 a barrel in the short term. It should also be noted that the rapid price growth is a reflection of the stimulus packages and economic stimulus in the United States and the weakening dollar and rising inflation in 2021, while there is a positive and optimistic outlook for market growth of demand.
*** Impact of oil market on commodities
But it is not bad to analyze the impact of oil prices on other markets, such as commodities. Our forecast is that immediately after the stabilization of oil price growth in all world markets, we will see price growth in the form of price supercycles in commodities. This could be exactly what happened in 2004, when oil prices guaranteed a rise in commodity markets. At the same time, the return of demand from China will cause prices to increase and demand will surpass supply this year.
*** Metal Bulletin look at the oil market
But there are factors in the commodity market that if even one of them is certain, we will see price growth in the whole market, and this issue is clearly mentioned in the reports of Metal Bulletin analysis. Commodity price drivers, such as inflation due to money injections, the devaluation of the dollar, the injection of stimulus packages and economic stimulus, new US government policies on infrastructure investment and increased investment in green and renewable energy, still make prices unpredictable in recent months. It is likely that the rise in prices will be heavier than the recession in the commodity market, and oil prices will certainly support this trend in the coming months.
*** Achilles heel of rising oil prices
But for now, several factors could push oil prices to a peak, and those are related to the uncertainties that account for the low percentage of risks. For example, the uncertainty of the effectiveness of the corona vaccine internationally could be an uncertainty about the outlook for oil market prices. Another issue that could allay positive emotions and oil price inflammation is the reduction in jet and gasoline fuel consumption due to continued travel restrictions this year, which could reduce current oil prices by at least 10 percent worldwide.
*** China’s role in oil pricing policies
But another important issue to note is China’s questionable behavior regarding its industrial and manufacturing policies this year. Lack of clear and accurate information on the real policies of China in 2021, because the continued growth of commodity rates is definitely dependent on China’s approach as the largest importer of commodities, and the determination of macro-policies before the annual meeting of the Communist Party March 10 will not be possible.
The Chinese Communist Party has risen to the top of the world economy since Biden was elected President of the United States, and this was the best news for the Chinese. It is noteworthy that we have recently witnessed China’s smart decisions to reduce imports of some raw materials such as iron ore or reduce import tariffs on some products such as scrap, while the country is trying to prevent the rapid growth of raw material prices and maintain profits for its industries. And there is also the prevention of sharp price increases in some products.
*** The government’s plan to benefit from the oil market boom
The Iranian government has also tried to make the most of the current situation in which oil prices have improved to reduce the trade deficit. The government intends to offer 5,000 billion tomans of oil bonds in the energy exchange tomorrow. We still remember the president’s statement about economic opening. This is exactly the optimism that the government is committed to. The plan was to pre-sell 200 million barrels of oil by the government with the aim of providing resources of about 190,000 billion tomans, but this plan was concluded with the opposition of the leaders of the other two powers.
The government intends to sell crude oil standard parallel futures through the Energy Exchange. The volume of these bonds is 10 thousand billion Tomans and on Tuesday 5 thousand billion Tomans will be offered in the energy exchange. This could have a very positive effect on the reduction of liquidity at the end of the government, and our guess is that the government is very accountable for this plan.
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