Crude and Refined Products Strengthen

Tuesday, July 3, 2018

Crude oil and refined products futures were strengthening by Tuesday evening due to Iranian threats to disrupt maritime oil movements. The increases came despite disappointing European retail sales figures, and signs Saudi Arabia and Russia will raise oil production.  Energy traders are monitoring developments in Libya, where 850,000 barrels per day of production has been disrupted and in Canada, where 360,000 barrels per day at the Syncrude facility in Alberta are offline.

Iranian President Hassan Rouhani, tells Reuters, “it has no meaning for Iranian oil not to be exported, while the region’s oil is exported.”  While the statement, given yesterday evening in Switzerland, is open to interpretation – it could be construed as a threat to interfere with regional oil exports should Iranian oil exports be halted.  Iran has previously threatened to block the Strait of Hormuz, through which 18.5 million barrels of oil flow per day.

In other news from Reuters, Saudi Energy Minister Khalid al-Falih and his Russian counterpart, Alexander Novak, agreed to continue close coordination, and that the current monitoring process needs to be amended, tasking the Joint Technical Committee to develop such a process for consideration by the Joint Ministerial Monitoring Committee. Both countries have stated they are increasing production, and as Iran contends that OPEC members may not exceed their allocation, their reaction to the size of Saudi Arabia’s output increase could be of import.

The US arm of Glencore has been issued a subpoena from the Department of Justice to provide documents relating to its business in Venezuela, the Democratic Republic of Congo, and Nigeria, on compliance with the Foreign Corrupt Practices Act and money-laundering statutes.

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