The removal of US waivers on Iranian crude oil export sanctions in April will not push Brent prices above US$80 per bbl in the second quarter, according to 61 per cent of those surveyed in GIQ’s monthly Energy Market Survey in May
Although the re-imposition of US sanctions has provided some support for prices – Brent has averaged the low US$70 per bbl range in the past month compared to the US$60 per bbl in the first quarter of the year – they still have to break through US$80 per bbl.
On the price direction for the second half of the year, 59 per cent of survey participants felt it would rest on whether the OPEC+ group of producers extends output cuts when it meets in June in Vienna.
The other 41 per cent said the main impetus would continue to be the US sanctions against Iran. Meanwhile, 68 per cent were of the opinion that output should be increased by the end of June, given rising geopolitical tensions in the region, with the remaining 32 per cent voting for the retention of the current production agreement.
During the first six months of this year, the OPEC+ group, which includes Russia, pledged to reduce supply by 1.2mn bpd, with statistics indicating strong adherence to the pact so far.
At the most recent meeting of the OPEC Joint Ministerial Monitoring Committee in Jeddah, Saudi Arabia on 19 May, Saudi Arabia’s energy minister, Khalid Al Falih, indicated a consensus among producers to continue driving down crude inventories, but in the same breath he said that the kingdom would remain responsive to market needs, effectively leaving all options on the table in June.
On the dynamics of the US-China trade deal, 79 per cent of the GIQ-polluted audience felt that US President Donald Trump would blink ahead of Chinese Premier Xi Jinping. For the past year, the tit-for-tat rhetoric on tariffs between the world’s two largest economies has held the global economy on tenterhooks, with the latest development diminishing any renewed hope of a prompt settlement.
In what has become the signature yo-yo style of Trump, his administration barred US firms a week ago from supplying Chinese technology firm Huawei without first obtaining a US government license, only to relax the ban a few days later, granting US firms temporary 90-day waivers to help Huawei maintain its existing networks.
