Published: Tue, May 15, 2018
Business | By Pearl Harrison

Rosneft first-quarter oil output down 1.2 percent because of OPEC deal

Rosneft first-quarter oil output down 1.2 percent because of OPEC deal

With the tensions rising in the Middle East, there is no doubt that the market focus will rest on the price of oil, given Iran is the third-largest oil producer in the Organisation of Petroleum Exporting Countries (OPEC).

Worldwide benchmark Brent crude futures for the July delivery rose by 0.8 percent to $78.93 per barrel, marking a new high after hitting a 3-1/2 year high of $78.53 during the previous session.

U.S. West Texas Intermediate (WTI) crude futures were at $70.88 a barrel, down 8 cents, though still not far off their November 2014 high of $71.89 a barrel reached last week.

"Iranian crude oil production increased quickly after the removal of sanctions in 2016 and several ongoing projects are set to bring new production on stream in the near future". "This time around, we expect much less of an impact". Looking at trading volumes, the recent move up has been accompanied by lower volumes.

Global benchmark Brent gained US$1.11 to settle at US$78.23 a barrel.

Futures for September delivery were down 1.2 per cent at 465.5 yuan a barrel on the Shanghai International Energy Exchange. The contract fell 1.2 per cent on Monday.

US drillers added 10 oil rigs in the week to May 11, bringing the total to 844, the highest level since March 2015, energy services firm Baker Hughes said on Friday. Opec has an adequate "buffer" of potential production to offset barrels lost from a re-imposition of Iranian sanctions, he said in an interview with Bloomberg Television. Foreign ministers from the UK, France and Germany will meet with their Iranian counterpart, Javad Zarif, to discuss salvaging an accord that allows Iranian oil exports, after the United States withdrew last week.

OPEC is to focus on oil inventory, rather than price.

The Kremlin-controlled company also said it has concluded a two-year deal with French oil major Total to supply crude oil via the Druzhba (Friendship) pipeline to Germany, amounting to between 4.8 million tonned and 10.8 million tonnes.

Iranian exports, which total around 2.5 million barrels per day, could decline by 500,000 to 1 million barrels per day as a result of Trump's withdrawal from the nuclear pact, which would be bullish for oil prices.

European countries and companies that continue to do business with Iran could face U.S. sanctions, National Security Adviser John Bolton said on Sunday.

WTI is now trading above $70.80.

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