The US crude oil is expected to reach at $US100 per barrel by 2019. Yes, you read that right! This sharp increase is expected to hamper the emerging economies as well as the countries which are highly dependent upon the crude imports for example, India. The price level of $US100 per barrel was not at all expected by the market participants because of the strong US production and the lesser demand for oil globally. However, it seems that those “good old days” are now gone. The emerging markets have been going through a rough patch lately primarily because of the stronger US dollar and elevated oil prices.
The Trump administration is of the view that OPEC needs to intervene in the supply shortages which are being witnessed. The US state department has sent out a statement which stated that OPEC needs to increase the production and should utilize the buffer it has maintained for the emergencies.
The sanctions imposed by the United States as well as the hurdles which are being faced by the US oil in order to reach the market are the primary reasons behind the strong rally in the oil prices. The market participants are of the view that these sanctions would have a more severe impact than anticipated by the investors. The oil exports from Iran have already witnessed a hit. These exports have fallen to 2 million bpd or barrels per day in September 2018 while in April 2018 the export figure stood at 2.8 million barrels per day.
Russia as well as Saudi Arabia would be increasing the supply which could provide some relief to the oil markets and might also cap the increasing prices of oil. The oil markets are counting on the Russia as well as OPEC to fill the supply gaps which have been made globally. The transportation concerns which are being encountered by the United States is also the major headwind.
On October 5, 2018, further increase in the oil prices was witnessed which was underpinned by the US sanctions on the oil exports from Iran which would be commencing from the month of November 2018. These increases partially offset the decline in the prices which were encountered in the earlier session because of a rise in the US inventories as well as decision made by the Russia and Saudi Arabia. Bottomline, the market observers remain bullish on the oil markets.
Bucking the recent trends, US oil was seen to fall about 3% to $US 74.03 per barrel.
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