Oil up on OPEC output cuts, worries about Iran sanctions

Oil up on OPEC output cuts, worries about Iran sanctions

Global oil demand expanded by 1.5 million barrels per day past year, thanks to a rebound in USA gasoline demand from drivers of SUVs and light trucks.

The U.S. exported a record 8.3 million barrels per day (bpd) last week of crude oil and petroleum products, the government also said Wednesday. This is an organization that controls the output of the crude oil.

While Saudi Arabia has led the way with production cuts, Saudi volumes produced in April are only around 500,000 barrels per day lower than the kingdom's maximum sustainable production rate.

This latest round of increases is caused by global tension, the kind of oil-moving tensions the USA hasn't seen for six or seven years.

Turnill says energy companies have more "capital discipline", as shown in their first-quarter earnings results: "Unlike in some past oil market rallies, companies are not making huge investments in future production". Under 2016's OPEC agreement, Venezuela agreed to cut its production by 95,000 bpd to 1.972 million bpd. According to the US Department of Energy, Venezuela is the third-largest supplier of imported crude oil and petroleum products to the United States, though USA imports from Venezuela have been on an overall decline in recent years.

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Iran re-emerged as a major oil exporter in 2016 after worldwide sanctions against it were lifted in return for curbs on Iran's nuclear program.

Noticeably, a lot of this growth came from the transport sector with a surge in larger vehicle purchases as SUV and light trucks represented almost two-thirds of total USA sales in 2017 up from 47 per cent in 2011, according to IEA data. Baker Hughes reported the number of active US rigs drilling for oil rose by 9 to 834 this week.

U.S. West Texas Intermediate (WTI) crude futures rose 80 cents to $70.52 per barrel. USA inventory data has weighed the market down, limiting the upside, he said.

Oil prices pushed over a three-year high on Friday as tensions between the United States and Iran continue to ratchet higher. Unipec executives have said previously that such prices increases were "unreasonable".

"You have the May 12 Iran and Trump headlines that support the market", he said.

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Wael Mahdi is an energy reporter specializing on OPEC and a co-author of "OPEC in a Shale Oil World: Where to Next?" The 10-year Treasury note yield edged up to 2.952.

USA crude is also finding more buyers in Europe due to the Brent/WTI arbitrage. Venezuela reported to OPEC - where Venezuela is a founding member - that its production had fallen to 1.509 million barrels per day in March 2018.

"The breakout $70 a barrel is not a fluke", he said.

"We are seeing record arrivals from the U.S. to Europe", a trader said, adding that while all sorts of grades were crossing the Atlantic, WTI Midland represented the largest portion.

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