Oil Price: Brent crosses the psychologically-important $80 barrier


Oil Price Tuesday

The price of Brent crossed the psychologically important $80 barrier in the early hours, today, undoubtedly causing ripples across the corridors of power across the world.

As of 10:30 GMT, the prices of two major benchmarks, WTI and Brent, stood at $76.27 and $80.23 respectively.

It is obvious that the demand picked up much faster than analysts anticipated it would and it inevitably led to the rise in crude oil price.

WTI Tuesday

The OPEC+ meeting, scheduled to be on October 4, will be the focus of analysts, investors, traders and of course, politicians with the cartel being under enormous pressure to increase the production – or at least to reverse its production cuts, announced last year,  by a significant amount.

Even the analyses by OPEC+ did not anticipate a rebound in demand on this scale. That was the reason for them to exercise restrain, when it came to increasing productions.

The main importers, meanwhile, resorted to tapping their strategic petroleum reserves in order to stem the tide, but to no avail.

As far as the Middle Eastern producers are concerned, their cautious approach partly stemmed from the evolving Iranian factor: the assumption was that Iran would be allowed to sell its oil in the international markets with the revival of the JCPOA, 2015 Iran nuclear deal.

In the last two weeks, the signals in this regard were positive, indeed: the visit by the Director General of the IAEA, International Atomic Energy Agency, to Iran and amicable atmosphere it thus generated raised the hope of the revival of the deal; the speeches made by Iranian delegation at the UN General Assembly, however, generated signals to the contrary, last week.

In short, the talks over the revival of the JCPOA are back in the doldrums. As a result, analysts do not see the feared oil glut due to Iran’s entry into the crude oil markets with a bang; they expect the global supply will struggle to meet the demand, unless the OPEC+ move its own goal posts dramatically in order to appease those who pressurise the group.

On military front, meanwhile, mysterious explosions and fires continue to rattle the Iranian authorities: a few days ago, there was a fire in a place run by its elite Republican guards that resulted in the death of three military men and injuries to quite a few; Iranians say they investigate the cause of fire.

In Syria, meanwhile, a militant group affiliated to Iran has come under attack by UFO’s – ‘unidentified flying objects’.

These developments, related to Iran, came at a time when Israel made it clear it is acting in the ‘present’ with ‘action’ rather than ‘words’ as far as Iran is concerned.

Iranian military commanders, meanwhile, keep issuing their confidence in dealing with any external threat; these statements are becoming unusually regular – and frequent.

Analysts may be taking into account the Iranian factor, in this context, much more seriously than they did months before; because, any military escalation involving Iran determines the vital flow of crude oil from the Middle East to the rest of the world, even if producers keep pumping more to appease the importers.


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