Amid the continued rally in oil prices, Saudi Aramco raised its official selling price for crude exported to Asia, with its flagship Arab Light cargos for March up by $0.60 per barrel to a total $2.80 per barrel premium over the benchmark.
According to Bloomberg, this is the highest price for Arab Light since March 2020, just before the pandemic struck, devastating demand and with it, prices.
Oil prices right now are at the highest in years, with Brent crude touching $94 per barrel in Asian trading today and West Texas Intermediate trading at over $92 per barrel for the first time since 2014.
This week, however, reports that the United States and Iran might be nearing a deal on Iran's nuclear program and U.S. sanctions caused fluctuations in oil prices. If Iran sanctions are lifted, there will be more barrels coming into global markets legally.
However, State Department officials have cautioned against premature optimism as there is still work to be done during the negotiations that resume today in Vienna.
Overall, according to commodity analysts, the sentiment about oil remains bullish because of the tight supply situation, especially after the OPEC+ meeting last week, at which the cartel decided to stick to its original output addition plan, despite growing demand.
"The market tone remained bullish, with investment bankers predicting Brent hitting $100 a barrel and global supply continuing to be tight with OPEC+ not reaching their output targets and the United States not raising output much," the chief analyst of Japanese Fujitomi Securities told Reuters earlier today.
Kazuhiko Saito added that some traders were wary of the upcoming U.S.-Iran negotiations and did not expect a quick deal, which added to upward price pressure for oil.
Since the start of the year, crude oil benchmarks have gained about 20 percent, and expectations are that Brent crude will hit $100 per barrel before this year's end.
By Irina Slav for Oilprice.com
ADVERTISEMENT
More Top Reads From Oilprice.com:
- Big Oil Isn’t Losing Any Sleep Over The EV Revolution
- Mining Majors Are Treading Carefully As Battery Metals Boom
- The Next Big Problem For U.S. Shale
And why not since the market is in a unique situation for the first time in years. It is in the most bullish state since 2014 and has also entered a super-cycle phase defined as a sustained period of expansion driven by robust growth in demand that could continue for years and take Brent crude oil price beyond $120 a barrel within the next five years.
Moreover, the market is showing clear signs of tightness as manifested by fast-declining oil inventories which are reported to have shed an estimated 690 million barrels globally in 2021 and could be expected to end 2022 lower still.
Fluctuations of crude oil prices are due to profit-taking by oil traders and reports about a possible Western-Russian compromise over the Ukraine crisis and not because of reports that the United States and Iran might be nearing a deal on Iran's nuclear program.
I am on record having been repeatedly saying that a lifting of US sanctions against Iran will never see the light of day now or ever. The reason is that the positions of the United States and Iran are irreconcilable.
The only deal Iran will accept is one on its own terms meaning a lifting of all US sanctions first with no new restrictions imposed on its nuclear and ballistic missile development programmes. This is something the United States and its allies won’t accept.
The global oil market has already factored in this situation so it hardly impacts prices nowadays. If in the very unthinkable event US sanctions have been lifted, the impact on oil prices will still be very mild and limited for the simple reason that what Iran could bring to the market doesn’t exceed 650,000 barrels a day (b/d) being the difference between its pre-sanctions and post-sanctions crude exports.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
Cyprus etc. and fracking gas also from England and France plus LNG from all over the world such as Qatar, Iran & Israel.