Breaking News
0

World's top traders divided on oil outlook as Iran sanctions loom

CommoditiesOct 10, 2018 09:51AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. A rainbow is seen over a pumpjack during sunset outside Scheibenhard

By Julia Payne and Dmitry Zhdannikov

LONDON (Reuters) - The world's biggest trading houses said on Wednesday they saw oil prices not falling below $65 per barrel and possibly breaking above $100 next year as U.S. sanctions on Iran reduce crude exports from the Islamic republic.

The range of views illustrates deep uncertainty among top industry players over the outlook, given the reimposition of sanctions on Iran and forecasts of slowing economies and energy demand in 2019, potentially leading to choppy trading.

Oil has rallied this year on expectations the sanctions, coming into force on Nov. 4, will strain supplies by lowering shipments from Iran, OPEC's third-largest oil producer. Brent crude (LCOc1) last week reached $86.74, the highest since 2014.

Jeremy Weir, chief executive of Trafigura, said at the Oil & Money conference in London that he would not be surprised to see oil trade at more than $100 per barrel next year.

Among others with a relatively bullish view was Alex Beard, chief executive for oil and gas at Glencore (L:GLEN), who forecast at the same event a mid-term oil price of $85-90.

"I think the sanctions will be very tough," Beard said. "Waivers will be extremely limited if any, and I don't see an end to it as the objective is regime change in 2019. I can't see anything that will affect oil prices dramatically to the downside."

A release of U.S. strategic oil stocks to ease the loss of Iranian supplies looked remote and would have limited impact anyway, and a plan by European nations aimed at maintaining trade with Iran was unlikely to help, he added.

"The European payment mechanism doesn't shield you if you use the U.S. financial system ... you can pay but don't expect to be on their Christmas card list," he said.

Beard added that U.S. infrastructure limitations would limit U.S. crude exports that could otherwise compensate and new refining capacity coming online in 2019 would add further tightness.

WEAKER DEMAND

Some of the traders said, however, they expected some demand destruction in emerging economies to help cap prices.

In 2019, forecasters such as the International Energy Agency say emerging-market crises and trade disputes could dent global demand while rising production from outside the Organization of the Petroleum Exporting Countries adds to supply.

The chief executive of Gunvor, Torbjorn Tornqvist, said he saw lower prices next year at $70-$75, citing a slowdown in demand growth and a well-supplied market.

"There will be some Iranian exports but the amount will depend on the price. If oil goes up to $100 a barrel then waivers, if it stays around $80 a barrel then no waivers," Tornqvist said.

Vitol presented the most bearish views, with its chairman, Ian Taylor, forecasting a price of $65 a barrel.

"We've knocked down our demand growth forecast this year and for next year ... I think the only issue is: will the U.S. pipelines in the Permian (basin) manage to deliver a huge increase in the second half of 2019?," Taylor said.

World's top traders divided on oil outlook as Iran sanctions loom
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email