Saudi Arabia Raises The Oil Prices, Oil Futures Up By A Dollar
The improved demand in Asia enabled Saudi Arabia to raise the price of crude oil, the second month in a row, pushing the oil futures up more than 1 U.S. dollar a barrel on Monday.
Brent, the international benchmark stabilized after it plummeting 5% on Thursday. The framework agreement between Iran and the six world powers, which promises the lifting of the embargo pushed the oil proves further down. Additional Iranian crude oil could flood the markets in June, if a more comprehensive deal is struck.
The experts, however, predict that an increase in global oil supply could come as late as 2016, with the Iranian export increase process taking several months. An analyst from Morgan Stanley noted that “”While clearly a bearish headline, a final deal and full lifting of sanctions still faces a number of obstacles.” He added that “Even if a final deal is reached, we do not expect any physical market impact before 2016.”
Due to the closed market, because of the Easter holidays, no U.S. crude or Brent oil futures were traded on Friday. During the increased demand in the global market, Saudi Arabia cut the official selling prices of crude oil, without decreasing the output, in an effort to gain the market share. The strategy has clearly worked, as Saudi Arabia was able to raise the prices in for April and May. However, the Arab Light oil is still cheaper compared to quotes of UAE.
When exactly will the sanctions on Iran be lifted, remains to be seen. The foreign minister of Iran, Javad Zarif expected for the embargo to be lifted immediately after the deal has been made, but the United States of America repeated that the sanctions will be lifted only when Iran shows that it respects the terms of the deal.