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Oil Posts Moderate Losses As Market Waits for Further Iran Action

May 11, 2018 at 15:24 by Matt Jackson

Oil prices have experienced slight losses on Friday, but remain above $71 and $77 for WTI and Brent crude respectively. Prices have, this week, been governed by President Trump’s decision to withdraw from the Iranian nuclear deal, as well as heightened tensions in the Middle East. Profit takers stalled the rise during intraday trading yesterday, but the march onward continued amid fears of new sanctions being placed against Iran themselves, as well as countries that continue to do business with them.

Prices are likely to remain volatile until precise details of the sanctions are launched, and a decision as to whether the nuclear deal can continue without the USA. Recent movements have led to the Bank of America stating that prices could rise as high as $100 per barrel next year; a target that Saudi Arabia have hinted at in recent months.

On Tuesday, US President, Donald Trump, withdrew from the Joint Comprehensive Plan of Action (JCPoA), commonly referred to as the Iran nuclear deal. The move had been widely expected, but its announcement led to supply uncertainty and an increase of more than 5% on oil prices. Trump also said that sanctions would be reimposed on OPEC’s 3rd largest oil supplier, and that countries still found to be doing business with them may face additional tariffs.

The UK, France, and Germany have said that there is no reason that the deal can’t continue without the USA, but a struggle will ensue.

Iranian and Israeli forces have also clashed in Syria this week, causing yet more geopolitical uncertainty and potentially further increasing oil prices.

Bank of America Merrill Lynch has warned that there could be a return to the days of $100 per barrel oil as soon as next year, as Brent crude heads towards $80. Saudi Arabia have said, in the past few weeks, that they would like to see it trading between $80 and $100 per barrel.

WTI crude oil prices dropped 0.08% to $71.30 at 16:00 GMT, while Brent crude figures slipped 0.04% to $77.44 a barrel.

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