Iranian Nuclear Deal is a Wild Card for the Energy Market
August 22, 2022
The Baker Hughes Rig Count Report had no change for oil rigs in this reporting week. Oil rigs stayed the same at 601 rigs compared to last year when there were 405 oil rigs.
The following is from Bloomberg:
The buyers in South Korea, India, and China have picked up substantial volumes from the US this month – more than 20 million barrels mostly for arrival in November, according to traders handling those shipments. The shifting purchasing patterns add another dimension to an already complex-global market, with greater volumes of Russian oil still headed to China and India after the invasion of Ukraine. At the same time, crude has been flooding out of the US at a record pace, with overall supplies swollen by the Biden administration’s major sales for the nation’s Strategic Petroleum Reserve, while the European Union is poised to tighten its curbs on Russian flows.
WTI crude oil prices rose slightly on Friday, for the 3rd straight day, but WTI crude oil was down 1.4% from the previous Friday for the nearby futures contract.
OPEC+ July production fell by 2.9 million barrels per day below its proposed production levels. Reuters reported that two sources from the producers group said, as sanctions on some members and low investments by other stymied its ability to raise output. Compliance with the production targets stood at 546% in July compared to 320% in June when the supply gap stood at 2.84 million bpd. This news is supportive to prices unless there is an Iran nuclear deal which will bring more barrels to the market.
The Iran nuclear deal is a wild card. There is a lot of mixed signals and information about this deal, and there will continue to be. It comes down to just how much the Biden Administration want to make this deal.
The US dollar has continued to trade higher which puts downward pressure on crude oil prices.