All you wanted to know about sanctions on Iran

Alicia Cross
May 15, 2018

Crude oil futures pushed higher again in European morning trading Tuesday, with geopolitical risk remaining elevated and the market still digesting OPEC's higher forecasts for global demand this year.

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At the current price, Nigeria generates $33.0 per barrel as excess revenue, amounting to $75.9 million per day.At the current oil price, the excess crude oil account is expected to reach $76 million per day, about 16.2 per cent, up from $65.4 million recorded in April, 2018.

U.S. West Texas Intermediate (WTI) crude futures were at $70.88 a barrel, down 8 cents, though still not far off their November 2014 high of $71.89 a barrel reached last week.

President Trump's decision to pull the US out of the Iran nuclear deal "constitutes a major geopolitical shift" which could trigger a move in the direction of "stagflation", a global strategy team at Citi, led by Mark Schofield, said in a research note, CNBC reported.

USA crude is trading at a hefty discount to Brent, the worldwide marker, thanks to sharp rises in US production to 10.7 million barrels per day, which has left the American domestic oil market well supplied.

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When sanctions were imposed by the Obama administration on Tehran in 2012, Iran's oil exports dropped to roughly 1.5 million barrels per day (MMBPD).

"The commitment of Saudi Arabia and the rest of OPEC to the production cuts is a major factor in supporting the price at the moment as well as the possibility of reduced exports from Iran due to sanctions", said William O'Loughlin, investment analyst at Rivkin Securities.

OPEC in its latest monthly report on Monday increased its world demand forecasts for 2018, with growth in consumption revised up by 25,000 b/d to 1.65 million b/d from the previous report.

The upcoming restored United States limits against OPEC-member Iran and robust demand for oil are what now keeping prices well supported, according to analysts.

OPEC data presented on Monday showed that crude stockpiles from members of the Organization for Economic Co-operation and Development (OECD) was down to 9 million barrels above the 5-year average and lower than the 340 million barrels above the average in January 2017.

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