Top traders split on out­look for oil as Iran sanc­tions loom

Shanghai Daily - - BUSINESS - EN­ERGY (Reuters)

THE world’s big­gest trad­ing houses said yes­ter­day they saw oil prices not fall­ing be­low US$65 per bar­rel and pos­si­bly break­ing above US$100 next year as US sanc­tions on Iran re­duce crude ex­ports from the Is­lamic repub­lic.

Oil has ral­lied this year on ex­pec­ta­tions the sanc­tions, com­ing into force on Novem­ber 4, will test the abil­ity of the Or­ga­ni­za­tion of the Pe­tro­leum Ex­port­ing Coun­tries and oth­ers to fill the sup­ply gap as ship­ments from OPEC mem­ber Iran de­cline.

Brent crude last week reached US$86.74 a bar­rel, the high­est since 2014.

But in 2019, fore­cast­ers such as the In­ter­na­tional En­ergy Agency say emerg­ing-mar­ket crises and trade dis­putes could dent global de­mand while ris­ing non-OPEC pro­duc­tion adds to sup­ply.

Jeremy Weir, chief ex­ec­u­tive of Trafigura trad­ing group, said at the Oil & Money con­fer­ence in Lon­don that he would not be sur­prised to see oil trade at more than US$100 per bar­rel next year.

Alex Beard, chief ex­ec­u­tive for oil and gas at Glen­core, said at the same event that he fore­cast a mid-term oil price of US$85-90, as a re­lease of US strate­gic oil stocks looked re­mote and would have limited im­pact any­way.

“I think the sanc­tions will be very tough. Waivers will be ex­tremely limited if any and I don’t see an end to it as the ob­jec­tive is regime change in 2019,” Beard said.

“I can’t see any­thing that will af­fect oil prices dra­mat­i­cally to the down­side.”

“The Euro­pean pay­ment mech­a­nism doesn’t shield you if you use the US fi­nan­cial sys­tem ... you can pay but don’t ex­pect to be on their Christ­mas card list.”

Beard added that US in­fra­struc­ture lim­i­ta­tions would limit US crude ex­ports that could other­wise com­pen­sate and new re­fin­ing ca­pac­ity com­ing on­line in 2019 would add fur­ther tight­ness.

The traders said, how­ever, they ex­pected some de­mand de­struc­tion in emerg­ing mar­ket economies to help cap oil prices.

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