Investing.com – The Trump Administration seems to be achieving its tri-fold agenda of punishing Iran while balancing the world’s energy needs and keeping oil prices low, as crude looks set for the largest weekly losssince February.
Eight countries, including Japan, India, South Korea and China, will be given waivers to continue importing oil from Tehran once export sanctions against the Islamic Republic start this weekend, Secretary of State Michael Pompeo confirmed that it will be eight nations, but added that details will be announced on Monday, Bloomberg Reported.
Crude oil markets fell further on the news, adding to Thursday’s 3% drop and losses since Monday that set them up for their worst week since February.
U.S. was 49 cents lower at $63.20 per barrel by 12:30 PM ET (16:30 GMT). It’s down almost 7% on the week.
U.K. crude, the international benchmark for oil, was down 14 cents at $72.75. It’s off 6% on the week.
The losses could be even sharper if , due later on Friday, show a fourth-straight week of rises.
Just a month ago, Brent had hit four-year highs above $86 and WTI had scaled 2014 peaks of nearly $77. But all that changed in October, with U.S. crude losing 11% and the U.K. benchmark 9%, their most since July 2016.
President Donald Trump has vowed to bring Iran’s crude exports to zero since he canceled the Obama-era deal with Tehran in 2015 that allowed the third-largest exporter in OPEC to continue its oil sales to the world in exchange for curbs on its nuclear program. But his administration is also aware that choking off about 2 million barrels per day (bpd) of exports averaged by Iran without alternatives will only send oil prices rallying again, as they did in the third quarter, hitting four-year highs.
Saudi Arabia, OPEC’s top exporter, has said lately that it will pump as much as necessary to keep markets supplied and Russia, another major oil producer, has also said there will be no squeeze. The United States, which basically flooded the world with cheap crude in three previous years, causing a glut, is again ramping up production, reaching a record high of 11.346 million bpd in August.
With the selloff in oil not appearing to be over, some traders think WTI could break below $60 and Brent under $70. Just a month ago, many thought Brent was on track to hit $100 as a momentum-driven rally took oil the other way.
But Wall Street bank Goldman Sachs (NYSE:), an influential voice in energy markets, said it expects Brent to return to its target of $80 by year end.
“The granting of waivers does not imply that Iran exports will stabilize near current levels,” Goldman said, commenting ahead of Friday’s news.
“As a result, we still expect that the global oil market will be in deficit in 4Q18, leading to a strengthening in Brent timespreads,” it said. “We expect this steeper backwardation to drive spot prices higher to our year-end $80 per barrel forecast, with low positioning also pointing to price upside in the short-term.”
Source: Investing.com
