Oil Prices see a sharp spurt upwards on Tuesday
Two oil platforms at the Gulf of Mexico were evacuated following warnings of storm Gordon.
Brent crude touched a high level of $79.72 on Tuesday. It later came down to levels of $78.95 per barrel, which was down by 80 cents.
With a tropical storm approaching the Gulf Coast, production had to be shut down and the place evacuated for safety reasons. Vessel traffic has been hit on restriction imposed in this area. The storm is expected to turn into a hurricane along the Gulf coast.
Stephen Brennock, the PVM analyst, says “the weather-related jolt sets the bull party in full swing in oil prices”.
On the other hand, with US sanctions, the Iran supplies are expected to fall and the global market seems to be tightening up.
Brent crude has been going upwards by almost 10 percent from August middle.
Iranian exports are expected to fall with President Trumps on economic sanctions to be set against Iran. “Production is on the increase in OPEC which is putting a cap on prices”, says oil analyst Christyan Malek from JP Morgan Chase.
Barclays says, “Prices may touch $80 per barrel soon”, and adds that it may average to $75 per barrel by 2020, though forecasts were at $55 per barrel.
Problems like reduced exports from Iran, accident at Jose terminal in Venezuela that may affect its exports, and strife at Libya, the scenario is not good, says Vienna’s JBC Energy head, Michael Dei-Michei.
17 percent of crude oil production in the US comes from the Gulf of Mexico. This is about 5 percent of the daily output of the natural gas, says the Energy Information Administration of US.
There may be supply issues, says BNP Paribas oil strategist, Harry Tchilinguirian. He expects Brent to be at $79 on average in the year 2019.