Oil Prices Still Have Strong Tailwinds
There has been plenty of good news for oil bulls in recent weeks, and Martin Newson, CEO and CIO at Optimus Capital, issued his thoughts on the prospects for Oil prices maintaining their rise. He said:
“Brent Crude Oil climbed through $80 after concerns over supply and demand dynamics continue to act as a tailwind for the commodity. As of mid-day today, Brent oil has risen 1.9% week-to-date. The fall-out from the US’ decision to withdraw from the Iran nuclear accord continued.
Whilst France remains committed to the accord, Total, the largest oil and gas company in France, announced it would cease operations in Iran unless the US granted it dispensation to continue its activities. This heightened concerns that the global supply of oil would fall as both US and non-US companies are forced to cut-off relationships with Iran.
Venezuela, which has the world’s largest proven oil reserves, has seen its output of oil fall 46% from mid-2015 to around 1.3 million barrels per day as the country’s economic and political turmoil continues. The incumbent president, Nicolás Maduro is expected to maintain his grip on the presidency for another six years with victory in the national elections this weekend, meaning the Venezuelan crisis could continue for the foreseeable future.
Combing the sanctions on Iran with OPEC cuts, the precipitous decline in Venezuela’s oil output and rising demand for oil, oil prices appear to have several tailwinds.”