Oil hits 4-yr high as Don pulls out of Iran N-deal
Pr e s i d e n t Donald Trump withdrew from the nuclear agreement with Iran. While withdrawing he imposed tough sanctions. Crude prices traded near 3-1/2 year high, at a time when global crude production is only just keeping pace with rising demand. Oil prices ended at $77.12 a barrel.
Back home, the rupee went into a tailspin and suffered one of its worst stretches in 1-1/4 years with the currency breaching the key psychological 67-mark against the resurgent US dollar.
Oil PSUs have decided not to hike petrol and diesel prices due to the Karnataka elections. IOC chairman Sanjiv Singh on Tuesday said the company has decided to “temporarily moderate” prices to avoid sharp spikes and panic among consumers.
State-run oil firms have since April 24 not changed petrol and diesel prices despite benchmark international product rates going up by nearly $3 per barrel.
The benchmark international diesel rates during this period have climbed from $84.68 per barrel to $87.14. Also, the rupee has weakened to `66.62 to a US dollar
from `65.41, making imports costlier.
The freeze follows the finance ministry’s refusal to slash excise duty to give relief to the common man after petrol hit a 55-month high of `74.63 a litre and diesel touched a record high of `65.93.
SAUDI ARABIA: Taking advantage of the situation, Saudi Arabia indicated on Wednesday that it could raise its oil output to offset any potential supply shortage as a result of new sanctions on Iran. Saudi Arabia “will work with major producers and consumers within and outside Opec to limit the impact of any supply shortages,” a Saudi energy ministry official said on Wednesday.
EUROPE: The sanctions could affect other non-oil businesses and the impact could be more pronounced on European companies than US ones because they were quick to invest in Iran after sanctions were lifted in 2015. Mr Trump explicitly warned that he would seek to hit European firms that continued to trade with Tehran — attracting a strong rebuke from European leaders and potentially opening a chasm between the Western alliance partners.
OPEC: Opec is in no hurry to decide whether to pump more oil to make up for an expected drop in exports from Iran. Officials are considering whether a drop in Iranian exports and a decline in supply from another Opec member, Venezuela, demands adjusting the deal that runs to the end of 2018. US sanctions on Iran will have a six-month period during which buyers should “wind down” oil purchases, meaning any loss of supply will not be felt. “I think we have 180 days before any supply impact,” an Opec source said when asked about any plans for action.
We are waiting for how the decision-makers in the EU will react. If the EU leans towards accommodating the US, all the progress we have made since 2015 will be lost. - WESTERN TRADE DIPLOMAT