U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower on Friday amid speculation that OPEC and its allies will soon raise production to offset a decline in exports from Iran following a move by the United States earlier in the week to halt all exports from the rogue nation.
OPEC and its allies including Russia have been tightening supply since January 1. This has been the primary driver of the more than four month rally. Supply tightened further when the U.S. imposed sanctions against Venezuela.
Earlier this week, the U.S. ended the waivers on exporting Iranian oil it had granted to eight major buyers. This spiked prices sharply higher to levels not seen in six months. At the time, analysts were saying that this would remove about 1 million barrels per day from crude oil from the market.
Since that initial spike to the upside, traders have had to deal with heightened volatility. However, the news has affected WTI and Brent differently.
WTI has been retreating since Wednesday’s U.S. Energy Information Administration’s weekly inventories report showed a bigger-than-expected build. Brent, on the other hand, had been rallying until Thursday. The move was fueled by the news that Germany, Poland and Slovakia had suspended imports of Russian oil via a major pipeline, citing poor quality. According to reports, the move cut parts of Europe off from a major supply route.
Since the initial thrust to…