The US sanctions against Iran over the past month have led to oil prices for several years, but to regain the supply of Iran and to boost demand for a slowing global economy, crude oil could be pumped again.
Lower oil prices may have a positive effect on US consumers and businesses even when inflation begins to tick, and will increase inflation-adjusted income for households and profit margins for energy-consuming businesses. However, they can upset the nation's energy producers who have become an important driver of US economic growth.
At the beginning of last month, Brent's crude oil, global oil level, rose to a four-year high at around $ 86 a barrel. Approach to US sanctions on Iranian crude and condensate consignments was delivered to 1.76 million barrels a day in June from 2.66 million barrels in June, according to shipwrapper Kpler. The West Texas Intermediate, the US standard has reached around $ 76 a barrel, nearly four years high, as Iranian shipments have slipped.
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1 and 1.5 million barrels of Iranian shipments are expected to be sanctioned by the United States.
However, Brent has declined by nearly 16% since the beginning of October, while WTI fell by 17%, in addition to stock markets, with concerns about the global economy, trade protection and rising interest rates.
In the short term, oil prices will be supported by the decline in Iranian stocks. US resumes sanctions on Monday following President Trump's resignation from an international agreement of 2015 to ease restrictions on nuclear program in the country.
Trump's management has made it clear that its goal is to reduce Iran's exports to zero. But the White House acknowledged that many buyers can not immediately go to zero and grant exemptions to eight countries to temporarily continue importing Iranian oil while switching to other suppliers.
In addition, analysts put pressure on oil prices as the United States, Russia and Saudi Arabia will increase supply if the weakening of global economic growth is likely to undermine demand. The Rapidan Energy Group predicts 2.5 million barrels per day in global 2019 forecasts.
"Over the past six months, the huge change in oil markets has been a tsunami for the next year," said Bob McNally, president of the Rapidan Energy Group. "Next year we have a lot of oversupply and before we consider the risk of demand."
The US economy is growing steadily, but the rest of the world is slowing down. In October, the International Monetary Fund reduced its forecasts for this year's and global economic growth, referring to trade protectionism and instability in emerging markets. This would ease the demand for energy consumers. In an October monthly report, the International Energy Agency reduced its growth forecasts for 2018 and 2019, referring to a weaker global economic outlook.
Members of the oil exporting countries have almost completely pumped the losses in the past months to offset the losses suffered by the Islamic Republic, the third largest producer of the cartel. For example, OPEC's ally Russia increased its production to 11.74 million barrels a day by 400,000 barrels per day between May and September, according to a post-Soviet record according to the International Energy Agency.
predicts that Brent will rise to $ 80 a barrel by the end of this year before falling to $ 60 in two years. The bank forecasts that global oil demand growth in 2019 will slow to 1.45 million barrels a day from 1,555 million barrels in 2018 as the global economy slows down.
"We are more risk-averse and more vulnerable," said Jeff Currie, head of Goldman Sachs commodity research.
The growth in US production will be a major factor as the sector has systematized logistics constraints, which made it difficult for US oil to move, Currie said.
US oil production is expected to reach record levels this year as the palm revolves around the industry. By 2022, America is expected to become a net exporter of energy, only seven years after Washington terminated the ban on selling US oil abroad. The global supply of 2.5 million barrels a day is reported by Rapidan Energy Group in 2019, with the majority coming from the United States and Brazil.
The Energy Information Directorate forecasts that US production will rise by 10% to 11.8 million barrels a year in 2019, potentially the world's best crude producer.
On the other hand, it is expected that further decline in Venezuelan production will be expected due to the ongoing economic crisis, while Libyan and Nigerian emissions are subject to a sudden disturbance in the midst of civil disturbances.
Of course, as prices fall, manufacturers may reduce supply and resubmit oil prices. Some analysts believe that OPEC's two-year meeting in December could consider lowering emissions.
Write to him Sarah McFarlane at [email protected]