Oil Slips as OPEC Seen Able to Offset Iran Losses From Sanctions

Oil Slips as OPEC Seen Able to Offset Iran Losses From Sanctions

He said that Germany has announced that it will protect its companies against U.S. sanctions imposed on Iran.

"Although higher oil prices adversely affect the USA outlook, the increases so far will likely have only very modest effects on growth, inflation and interest rates".

"Those constraints mean that oil prices could breach $80 a barrel over the next six months, particularly if OPEC production continues to remain underwhelming", he says.

While Dhar admits that elevated oil prices will incentivise raised U.S. output, potentially capping further gains, he thinks pipeline constraints will likely limit any-near term response from USA producers.

The oil-cartel expects non-OPEC supply in 2018 to grow by 1.7 million barrels year-over-year, almost 90% of which should come from the U.S.

The deal between the Organization of the Petroleum Exporting Countries and non-Opec producers led by Russian Federation to cut supplies and erase a global glut has helped oil prices reach US$78 a barrel, their highest level since 2014. That's down from 340 million barrels above the average in January 2017.

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Futures for September delivery on the Shanghai International Energy Exchange fell 1.2 percent to 465.5 yuan a barrel.

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

"NGLs and non-conventional oil, while estimates for OPEC crude production are based on secondary sources", said the cartel.

Before the Iran nuclear deal, the United States sanctioned Iran's oil production in 2012 which reduced the output from 2.5m barrels per day to just over 1m.

"Fast-growing USA tight oil production is increasingly faced with costly logistical constraints in terms of outtake capacity from land-locked production sites", OPEC said.

OPEC signaled the group and its allies were ready to step in should "geopolitical developments" impact supply.

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