Oil prices rise on supply losses, US push to isolate Iran


OPEC leader Saudi Arabia is set to increase oil production to a record 10.8 million barrels per day (bpd) in July, Bloomberg reports.

The oil markets responded with WTI Crude Oil up 3.5% and Brent Crude was up 2.18%. But at the moment, the Congolese government is more concerned - and rightly so - about enjoying an equilibrium in global oil markets and attracting higher investments into the sector.

"The significant risk to this forecast is that production in Iran or Venezuela collapses, which could offset all of the increase in output from the rest of OPEC and Russian Federation, resulting in a much tighter market", he said.

"We're still in a tug-of-war between daily twists and turns of a potential trade war and the reality of a strong underlying USA economy", Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Co, said.

"Saturday's OPEC+ press conference provided more clarity on the decision to increase production, with guidance for a full 1 million bpd ramp-up in 2H18", Goldman said in a note on Sunday.

That would limit Opec's ability to react to further disruptions - and there are plenty coming.

Oil futures rose Tuesday with the USA benchmark climbing above $70 for the first time since May, buoyed by uncertainty over Libyan crude exports and doubts over OPEC's ability to boost production quickly enough to prevent a shortfall in global supplies.

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Mr Zanganeh also said President Trump was wrong to target Iran's oil as part of sanctions due to come into force in November against the Islamic Republic.

The US president tweeted within an hour of OPEC announcing its deal: "Hope OPEC will increase output substantially".

In addition, the American Petroleum Institute (API) has reported a sharp drop of 9.228 million barrels in United States crude inventories in the week that ended on June 22 - much more than the 2.572 million barrels fall predicted and the previous week's 3.016 million barrel decline.

Before last week's meeting, Russian Federation proposed OPEC and non-OPEC raised output by 1.5 million bpd, while Saudi Arabia and its Gulf allies supported an increase of somewhere between 300,000 to 600,000 bpd. There is not much oil in the market'.

"The kingdom's energy minister Khalid Al Falih indicated that members of the new deal with spare capacity - predominantly Saudi Arabia, its Gulf allies and Russian Federation - will increase output to make up for those that can not produce enough", reported FT. The U.S. official specifically cited India and China as countries that would have to stop accepting Iranian imports, though officials have not yet spoken with those countries.

Earlier this month, the International Energy Agency said that combined production from Venezuela and Iran could plunge a further 30 per cent - or around 1.5 million barrels a day - by the end of next year. As numerous OPEC members do not have the resources or capability to increase oil production, Russian Federation and Saudi Arabia will mainly benefit from the increase.