Oil hits highest price in three years

Oil hits highest price in three years

The coming USA sanctions pushed up oil prices last week after President Donald Trump withdrew the United States from the nuclear deal. The immediate aftermath has seen tensions between Israel and Iran rise in Syria, already leading to one military clash.

Oil prices steadied below 3-1/2 year highs on Monday as resistance emerged in Europe and Asia to US sanctions against major crude exporter Iran, while rising USA drilling pointed to higher North American production.

Francisco Blanch, commodity and derivative strategist at the bank said in a report published "There is also a risk of Dollars 100/bbl, as our forward balances embed OPEC "tapering" and no major drop in Iranian crude exports".

Oil and gas accounts for about 40 percent of the Saudi economy and cuts in crude oil production ate into real GDP growth by about 0.7 percent, even as the non-hydrocarbon sector grew by 1 percent past year. While those nations have vowed to stand by the agreement, there is little likeliness that U.S. allies would side with Iran in this issue.

Brent crude oil reached an intraday peak of $79.47 a barrel, up $1.24 and its highest since November 2014, before easing to $78.28, up 5 cents, by 1345 GMT. "Plus we see a high likelihood of OPEC working with Russian Federation in 2019 to set a floor on oil prices".

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.

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In total, South Korea's April crude oil imports were 11.59 million tonnes, or 2.83 million bpd, up 2.5 percent from 11.30 million tonnes from 2017, according to the data. Refined oil product exports soared 46 percent on the year in April, but eased from the all-time high in March.

Since late 2017, longer-dated US oil futures contracts are trading at prices lower than nearer-term contracts, a configuration known as backwardation, indicating that the market at least currently doesn't believe prices will continue to be as high as they are now, longer term.

The global oil picture has dramatically changed in the past year.

April crude imports from Saudi Arabia, South Korea's top crude oil supplier, fell 6.9 percent to 3.32 million tonnes, or 810,564 bpd, from past year.

On Monday, however, markets were held in check by news of a rise in US drilling for new oil production.

In addition to the Iran situation, the latest EIA figures painted a picture of lower fuel supply in the United States, which heaped additional upward pressure on prices at the pump.

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