Oil prices down with eyes on Greece debt ne­go­ti­a­tions, Iran talks

The China Post - - BUSINESS INDEX & -

Oil prices edged higher in Asia Mon­day but gains were capped as deal­ers fo­cused on crunch Greek debt talks as well as a pos­si­ble re­turn of Ira­nian sup­plies dis­rupted by in­ter­na­tional sanc­tions, an­a­lysts said.

U.S. bench­mark West Texas In­ter­me­di­ate for July de­liv­ery gained five U.S. cents to US$59.66 while Brent crude for Au­gust gained three cents to US$63.05 in af­ter­noon trade.

Sanjeev Gupta, head of the Asia-Pa­cific oil and gas prac­tice at busi­ness con­sul­tancy firm EY, said crude prices were fac­ing down­ward pres­sure “due to con­cerns over the Greek fi­nan­cial cri­sis”.

The heads of the 19 eu­ro­zone coun­tries will hold an emer­gency sum­mit in Brus­sels later Mon­day un­der pres­sure to pre­vent Greece from de­fault­ing on its debt.

If the two sides are un­able to agree a deal, Greece will likely de­fault on an IMF debt pay­ment of around 1.5 bil­lion eu­ros due on June 30, lead­ing to the pos­si­bil­ity of it crash­ing out of the eu­ro­zone.

Greek Prime Min­is­ter Alexis Tsipras on Sun­day pre­sented new pro­pos­als on re­form­ing the coun­try’s bailout to Euro­pean lead­ers, rais­ing hopes that a de­fault can be averted af­ter a five-month dead­lock.

Daniel Ang, in­vest­ment an­a­lyst at Phillip Fu­tures in Sin­ga­pore, said ne­go­ti­a­tions be­tween crude pro­ducer Iran and world pow­ers over Tehran’s con­tro­ver­sial nu­clear pro­gramme are “go­ing to give head­wind for crude prices this week”.

Six global pow­ers — the United King­dom, China, France, Ger­many, Rus­sia and the United States — are try­ing to nail down a deal to curb Iran’s nu­clear am­bi­tions by re­duc­ing its stock­piles of en­riched ura­nium and moth­balling some of its sites.

If the agree­ment is reached by June 30 and im­ple­mented sub­se­quently, the pow­ers have agreed to grad­u­ally scale back sanc­tions im­posed since 2012, in­clud­ing on its petroleum in­dus­try.

Iran has the world’s fourth-largest oil re­serves but its ex­ports have fallen from more than 2.2 mil­lion bar­rels per day in 2011 to about 1.3 mil­lion be­cause of the sanc­tions.

A re­turn of dis­rupted Ira­nian sup­plies “could cause another round of over­sup­ply” in a global mar­ket al­ready flush with stock­piles, Ang said.

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