Despite Iran's irresponsible and premature statement about the oil markets lately, though oil markets continue its upward movement with strong trading activities in the physical markets, stronger demand and stronger refining margins! Consequently, Brent crude price rose to nearly $70 a barrel, touching the $70 barrier for the first time since December 2014!
Such upward trend is not due to seasonal / stronger demand for oil as a result for heating fuel demand in winter only, because this wasn’t the case during 2016 winter when Brent crude price bottomed to $27 a barrel! Yet, strong tendency of the market is because of supply / demand balance that began to reap the benefits of the success of the production cut agreement, with the cut effectiveness remarkable compliance rates for OPEC and non-OPEC producers, which contributed to the continuous decline of global oil stocks and the decline of US oil inventories for the eight week in a row!
Despite the rise in oil prices to these levels, US oil production fell by 300,000 barrels per day to 9.5 million barrels per day, and production did not exceed the barrier of 10 million barrels per day as expected! This raises a lot of questions about the economics of shale oil production!
Oil markets in stability and prices in a bullish direction despite the statements of the Iranian Oil Minister comments: (OPEC does not want the price of Brent crude above $60 a barrel) because it will stimulate shale oil production, although there is a drop of 300,000 barrels in US oil production despite high levels of prices!
Oil markets in the correction mood and did not care for such irresponsive statement, that Iran's oil minister declared on behalf of OPEC, in a rewarding stage where OPEC is reaping the success of the historical oil production cut agreement for the second Year in a row!
The Iranian oil minister is fully aware that the higher oil prices, the more questions from the social Iranian classes ... Where did that wealth go?!
It was better for the Iranian officials to turn their attention to their internal affairs and the outrageous public anger as the protests intensified, the awareness on the Iranian society revealed the misuse of the mullahs' regime to the national oil income!
Regardless which levels oil prices at, Oil income is spent in financing terrorism and the spread of chaos in the region, to gain more regional animosities and international discontent, and adversely damaging the Iranian economy, which is dying and eaten by the worms of corruption!
Energy and Oil Marketing Adviser
(Former OPEC / Saudi Aramco)