Oil Up More Than $1 After Saudis Raise Prices To Asia
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Oil Up More Than $1 After Saudis Raise Prices To Asia

Oil Up More Than $1 After Saudis Raise Prices To Asia

Brent regained ground after tumbling up to five per cent on Thursday, when a preliminary nuclear deal was reached between world powers and Iran.

Gulf Business

Oil futures climbed more than $1 a barrel on Monday, after Saudi Arabia raised its prices for crude sales to Asia for the second month running, signalling improved demand in the region.

International benchmark Brent regained ground after tumbling as much as 5 percent on Thursday when Iran reached a preliminary deal on its nuclear programme with six world powers. More Iranian oil could enter global markets if that is followed by a comprehensive deal by June.

But expectations of an immediate increase in supply have been tempered as analysts warned a ramp-up in exports could take months and would likely not happen before 2016.

“While clearly a bearish headline, a final deal and full lifting of sanctions still faces a number of obstacles,” Morgan Stanley analysts said in a note.

“Even if a final deal is reached, we do not expect any physical market impact before 2016,” the analysts said.

Brent crude for May delivery touched a high of $56.90 a barrel and was up $1.24 from Thursday at $56.19 by 1304 GMT. U.S. crude for May delivery was $1 higher at $50.14 a barrel, after earlier touching $50.97.

There was no trading in either Brent or U.S. crude futures on Friday as markets were closed for the start of the Easter holiday.

The world’s top exporter Saudi Arabia kept output steady and cut its official selling prices (OSPs) sharply late last year in a fight for market share during a global supply glut.

Its ability to raise prices for April and May suggests its strategy is working, although competition has kept its flagship Arab Light at a discount to Oman/Dubai quotes, analysts said.

It is unclear exactly when sanctions on Iran would be lifted if a deal is reached in June. Iran’s foreign minister, Mohammed Javad Zarif, said on Saturday that U.N. sanctions would be lifted immediately after a deal, but the United States released a fact sheet on Thursday saying that sanctions would be lifted as Iran demonstrates compliance with the terms of a deal.

“Both sides will describe the deal differently,” said Olivier Jakob of Swiss-based consultancy Petromatrix.

“What has been agreed will fall in between,” he said.

Despite the sanctions on Iran, China’s imports from the OPEC producer are set to rise from August as a Chinese state trader has signed a deal with the National Iranian Oil Company to buy more condensate.

Concerns over fighting in Yemen also supported prices, as fighting between a Saudi-backed coalition and Shi’ite Houthi forces continued in the port city of Aden, which overlooks a major shipping lane between Europe and the Arab Gulf.


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