Planned Iran sanctions, tight supply send oil to new multi-year high

Oil prices race to $80 as US drilling rises

Oil prices kept their footing on positive grounds on Tuesday, as markets tightened on the Organization of the Petroleum Exporting Countries' (OPEC) continuous effort to trim output and the upcoming USA sanctions against Iran.

At the current price, Nigeria generates $33.0 per barrel as excess revenue, amounting to $75.9 million per day.At the current oil price, the excess crude oil account is expected to reach $76 million per day, about 16.2 per cent, up from $65.4 million recorded in April, 2018.

USA light crude was 5 cents higher at $71.01 a barrel, also not far off its highest since November 2014.

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"President Donald Trump's decision this week to restore punitive sanctions on Iran, OPEC's third biggest producer, has dominated discussion of oil markets and energy stocks", reports CNBC.

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

"Strong global oil consumption has come up against a 1½ -year-old deal led by OPEC and Russian Federation to manage crude supply among producers".

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Once the sanctions are reinstated later this year, traders expect a massive decline from 200,000 to about 1 million barrels per day (bpd) in Iran's oil exports, which may put the already squeezed crude markets at risk of becoming undersupply. In China, the world's biggest oil importer, refinery runs rose almost 12% in April compared with the same month a year ago, to about 12.06-million barrels per day (bpd), marking the second-highest level on record on a daily basis, data showed on Tuesday.

The tightening market has all but eliminated a global supply overhang which depressed crude prices between late 2014 and early 2017.

Brent crude was up 20 cents at 77.32 dollars a barrel by 1315 GMT on Monday and United States light crude rose 10 cents to 70.80 dollars.

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OPEC data presented on Monday showed that crude stockpiles from members of the Organization for Economic Co-operation and Development (OECD) was down to 9 million barrels above the 5-year average and lower than the 340 million barrels above the average in January 2017. The Permian basin in Texas, the biggest U.S. oil patch, is expected to see output climb 78,000 bpd to a fresh record of 3.28-million bpd.

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