Iran, Venezuela weighing on oil market: IEA

Iran, Venezuela weighing on oil market: IEA

Danish oil product tanker operator Torm on Tuesday said it has stopped taking new orders in Iran as a outcome of US plans to reimpose sanctions on Tehran. The production growth may be far from over, contributing to US crude´s discount to Brent, analysts said.

OPEC, for its part, estimated that the excess oil inventories in the OECD had shrunk to just 9 million barrels.

The Secretary-General, Organisation of the Petroleum Exporting Countries (OPEC), Mohammed Barkindo, attributed the rising oil prices to efforts by OPEC and non-OPEC countries to rebalance the market through production freeze.

Greater GDP growth has the potential to increase oil consumption beyond forecasted levels, which could put upward pressure on crude oil prices, and simultaneously drive systemic market movements in equities, bonds, and other commodities, which are often correlated with movements in crude oil prices.

Chinese refineries processed 12.13 million bpd in March, beating the previous record of 12.03 million bpd from November 2017.

At the same time, China's domestic crude oil production has been languishing near June 2011 lows in the first quarter this year, prompting higher imports to meet growing demand.

The call on OPEC crude and stocks will average around 32.25 mb/d for the remainder of 2018, almost 0.6 mb/d higher than April output, according to the report.

Iran exported 2.6 million bpd of crude in April, according to the oil ministry's news agency SHANA. Steady refining margins and backlog cargoes to some independent refiners contributed to the record import volumes.

Still, "we don't expect China to reduce its imports of crude from Iran given their long-term signed contracts and the ability to pay in yuan", said Abhishek Deshpande, the head of oil market research & strategy at J. P. Morgan.

"In these early days, there is understandable uncertainty about (the) potential impact on Iran's oil exports" from the United States move, it said.

Senior oil and gas equity analyst Iain Reid at Macquarie Group said that the reason for the market being as tight as it is at the moment is due to Opec failing to "open the floodgates" to compensate for the lost Iranian barrels, but also the decline in production in Venezuela, another Opec nation.

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