Iran's Oil Minister: oil exports won't change much despite sanctions

Iran's Oil Minister: oil exports won't change much despite sanctions

If OPEC and Russian Federation kept in place their existing oil production cuts for 2018 and beyond, the price could even rise to $US100 before the end of next year, they said.

The two leaders agreed for their teams to hold discussions on the potential impact of USA sanctions on firms doing business in Iran, Downing Street said.

The remarks from Middle East producers "did force investors to look a little bit more closer at the impact of USA sanctions on Iran and certainly there's some questions about the impact that we'll eventually see", Daniel Hynes, a senior commodities strategist at the Australia & New Zealand Banking Group Ltd., said by phone from Sydney.

The sanctions come amid an oil market that has been tightening due to strong demand, especially in Asia, and as top exporter Saudi Arabia and No.1 producer Russian Federation have led efforts since 2017 to withhold oil supplies to prop up prices.

They expect West Texas Intermediate, the most commonly cited USA contract, to trade $6 below the price of Brent in 2019.

Last week's speculative buying was initiated by President Trump's decision on Tuesday to walk away from the Iran nuclear deal.

By the close of business on Friday, Crude Oil was trading above US$77 (AUS$101.88), a 25 per cent rise since its last low in February and a 90 per cent rise on the "rock bottom" prices seen in January 2016. That would hurt not just Iran's economy but also the dollar's liquidity, as the global oil trade undergirds the greenback, said Edward Al Hussainy, senior analyst, global rates and currency at Columbia Threadneedle in Minneapolis.

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"The market is now focused on OPEC and other producers' ability to react to this potential supply disruption", ANZ bank said on Friday.

The main goal of the supply deal was to reduce excess oil stocks to the five-year average.

Carbone's remarks inspired CNBC co-panelist and contributor Ron Insana - who worries that oil could climb to as high as $100 per barrel this year due to geopolitical tensions - to remark that said tensions are "a risk I don't think is fully discounted by the markets yet".

"In 2012 the reduction in Iranian crude production and exports was around 1 million bpd", Wittner said.

OPEC's agreement is built to stretch as far as the end of 2018.

USA light crude CLc1 was down 66 cents at $70.70, off a 3-1/2 year high of $71.89 it hit on Thursday.

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