Left Menu
Development News Edition

UPDATE 8-Oil prices slide 2% after report Trump weighed easing Iran sanctions

Reuters | Washington DC | Updated: 12-09-2019 00:44 IST | Created: 12-09-2019 00:30 IST
UPDATE 8-Oil prices slide 2% after report Trump weighed easing Iran sanctions
US President Donald Trump. (File Photo) Image Credit: ANI

Oil prices tumbled more than 2% on Wednesday after a report that U.S. President Donald Trump weighed easing sanctions on Iran, which could boost global crude supply at a time of lingering worries about global energy demand.

Market participants cited a report from Bloomberg that Trump discussed easing sanctions on Iran to help secure a meeting with Iranian President Hassan Rouhani later this month. The Bloomberg report, attributed to three unnamed sources, said then-National Security Advisor John Bolton argued against such a step. (https://tinyurl.com/y4wcevfp)

Brent crude settled $1.57, or 2.5% lower, at $60.81 after hitting a session low of $60.52, while U.S. West Texas Intermediate fell $1.65, or 2.9% to end the session at $55.75 a barrel after sliding as low as $55.61. Bolton's departure removes one of the strongest advocates of a hard line towards Iran from Trump's White House.

"The reason the market reacted so dramatically is that the biggest bearish overhang on the market is the possible re-entry of Iranian oil," said Phil Flynn, an analyst at Price Futures Group in Chicago. "We realized what a great impact it had on the market late last year when Trump granted waivers to the biggest buyers of Iranian oil." "Bolton leaving suggests that there could be a return to the market of that oil, perhaps by the end of the year."

Iran will not negotiate with the United States while sanctions on Tehran are still enforced by Washington, Rouhani told his French counterpart Emmanuel Macron in a phone call on Wednesday, Iranian state media reported. "Oil prices are down on concern that the U.S. administration could ease its stance versus Iran, which could see disrupted Iranian oil barrels returning to the market if US sanctions against Iran get eased." UBS oil analyst Giovanni Staunovo said.

"This outcome would make OPEC+ target to keep the oil market in balance even more challenging in 2020." Oil prices have eked out gains so far this month, supported by declines in global inventories and signs of easing trade tensions between the United States and China.

Prices rose this week after Prince Abdulaziz bin Salman, Saudi Arabia's new energy minister, said oil policy would not change and said the OPEC+ output cut deal would be maintained. Separately, the U.S. Energy Information Administration said domestic gasoline stocks decreased less than expected last week while crude stocks fell to the lowest in nearly a year.

"Gasoline stocks fell by 682,000 barrels, slightly less than expected, whilst distillate stocks increased unexpectedly by 2.7 million barrels," said Carsten Fritsch, oil analyst at Commerzbank AG in Frankfurt, Germany. "It seems that the market finally focuses more on bearish product stocks than on bullish crude stocks."

OPEC cut its forecast for growth in world oil demand in 2020 due to an economic slowdown. The U.S Energy Information Administration (EIA) also slashed demand forecasts this week, and growing signs of slowdown were flagged by oil traders and executives attending industry gatherings in Singapore and Abu Dhabi. OPEC+ has pointed to rising global production next year. Weekly U.S. crude production has surged to a record at 12.4 million bpd while a monthly report from the EIA forecast output to average 13.23 million bpd in 2020.

Limiting the downside to oil prices, Iraqi Oil Minister Thamer Ghadhban said OPEC+ would discuss whether to deepen output cuts, when ministers meet on Thursday. Russia's Energy Minister Alexander Novak said the alliance of OPEC+ and other producers, known as OPEC+, would discuss global oil demand, but there were no fresh proposals to change production cut.

Also Read: Donald Trump gets statue in wife's homeland of Slovenia



South Africa's COVID-19 response: Surprising outcomes or just poor data management?

South Africa has been committed to improving its health information system and shows that a robust digital has considerable scope to improve healthcare for the entire population. But the COVID-19 pandemic has highlighted that significant ga...

Post-COVID-19 Nigeria needs a robust Health Management Information System to handle high disease burden

Nigeria is among a few countries that conceptualised a health management information system HMIS in the early 90s but implementation has been a challenge till date. Besides COVID-19, the country has a huge burden of communicable and non-com...

Morocco COVID-19 response: A fragile health system and the deteriorating situation

Learning from its European neighbors, Morocco imposed drastic measures from the initial stages of the COVID-19 outbreak to try to contain its spread. The strategy worked for a few months but the cases have surged after mid-June. In this sit...

COVID-19: Argentina’s health system inefficiencies exaggerate flaws of health information system

You can recover from a drop in the GDP, but you cant recover from death, was the straightforward mindset of Argentinas President Alberto Fernndez and defined the countrys response to COVID-19. The South American nation imposed a strict...


Latest News

Ontario projects surge of COVID-19 cases akin to that of hard-hit Australian state

Ontario could reach 1,000 new COVID-19 cases a day in the first half of October, projections released on Wednesday showed, putting Canadas most-populous province on a trajectory similar to that of the hard-hit Australian state of Victoria. ...

U.S. airlines await roller coaster aid developments in Washington

Hours before mass furloughs of airline workers go into effect, U.S. airlines were still holding out hope for agreement in Washington over a fresh coronavirus aid package, after the House of Representatives delayed a vote to give more time f...

Funerals becoming 'an opportunity to flaunt wealth': South African Hindu Maha Sabha

The South African Hindu Maha Sabha SAHMS has said funeral is a time to honour the departed with Sanskaar and discipline and should not be used as an opportunity to flaunt wealth. In Hindu tradition, a funeral should not be an ostentatious c...

Audience for Trump-Biden debate falls short of 2016 record

The first U.S. presidential debate between Republican President Donald Trump and Democratic rival Joe Biden attracted a smaller television audience than the record set four years ago, according to Nielsen data released on Wednesday. An esti...

Give Feedback