Trump Tweet on Iran Stirs Oil Markets
24 July 2018 - 1:10AM
Dow Jones News
By Christopher Alessi and Amrith Ramkumar
Oil prices rose Monday after heightened rhetoric between the
U.S. and Iran added to investor concerns that crude exports from
the Islamic Republic could be at risk.
Light, sweet crude for September delivery rose 1.3% to $69.16 a
barrel on the New York Mercantile Exchange, after falling in three
consecutive weeks. Brent crude, the global benchmark, was up 0.9%
at $73.71 a barrel. Prices have recently fallen from multiyear
highs hit earlier this year with investors worried that the supply
disruptions that have fueled much of the rally might be easing.
But President Donald Trump late Sunday tweeted a message to his
Iranian counterpart, Hassan Rouhani, warning that threats against
the U.S. will be met with consequences few in history have
suffered. The tweet appeared to refer to comments Mr. Rouhani had
made warning against hard-line U.S. policies against Iran.
Mr. Trump in May withdrew the U.S. from a 2015 international
agreement to curb Iran's nuclear program, setting the stage for the
reimposition of economic sanctions that are expected to hinder
Iran's oil industry. Analysts have estimated up to one million
barrels a day out of Iran's more than 2.5 million barrels a day of
crude exports could be at risk.
The U.S. has threatened to slap sanctions on countries that
don't cut oil imports from Iran to "zero" by Nov. 4. While supply
uncertainty surrounding other countries including Libya and
Venezuela has boosted oil, some investors say the wide range of
outcomes regarding Iranian oil exports could spur further market
volatility.
"Iran holds the key for the oil balance in the coming months.
Its exports are clouded by uncertainty following the reintroduction
of U.S. oil sanctions," said Stephen Brennock, an analyst at
brokerage PVM Oil Associates Ltd.
At the same time, oil prices have been tempered by rising supply
from the Organization of the Petroleum Exporting Countries -- led
by Saudi Arabia -- and producing allies like Russia following a
decision in late June to begin ramping up output after more than a
year of holding back production.
That and other "neutralizing factors," including the "escalation
of the global trade conflict and possible negative effects on oil
demand," have limited the market's reaction to the latest threats
by Mr. Trump against Iran, Commerzbank analysts said in a note to
clients.
Market participants were looking ahead to weekly U.S. inventory
data scheduled to be released Wednesday for the latest update on
domestic stockpiles.
Among refined products, gasoline futures added 0.7% to $2.0830 a
gallon. Diesel futures were recently up 0.9% at $2.1227 a
gallon.
Write to Christopher Alessi at christopher.alessi@wsj.com and
Amrith Ramkumar at amrith.ramkumar@wsj.com
(END) Dow Jones Newswires
July 23, 2018 10:55 ET (14:55 GMT)
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