Falling oil supply from Iran supports oil price

Falling oil supply from Iran supports oil price


via Commerzbank Commodity Research

Following the contract rollover, Brent is trading at $109.3 per barrel, i.e. one dollar higher than yesterday, finding support from the risks to supply. According to US President Obama, who will be visiting Israel next week, Iran could be in possession of a nuclear bomb in over a year. Obama is therefore keeping all options open. According to industrial sources, oil exports from Iran are set to decline by 25% year-on-year in March to hit their lowest level since the beginning of the sanctions. South Korea, the world’s fifth-largest oil importer, already slashed its oil imports from Iran by 33% year-on-year in February. According to consultant firm Oil Movements, OPEC will be stepping up its oil shipments in the four weeks to 30 March by 300 thousand barrels per day, i.e. 1.3%, to cope with growing demand from the West, which should therefore not weigh on prices. 
The price of US natural gas gained a further 3.6% yesterday on the back of a sharper than expected inventory reduction in the US; it closed at $3.81 per mmBtu, its highest level since the end of November. In view of the higher price level – within just a month the price has soared by more than 20% – the demand for gas to be used to generate electricity is likely to fall. In conjunction with the imminent end of the heating season, this should block any further price rise, especially since gas production is likely to be scaled up at the higher prices.