Oil markets getting stronger on the news regarding American fresh sanctions against Iran. The anti-Iranian position of the U.S. administration represents just one facet of commodities markets, the most recent reason to expect less crude for sale. Also President Donald Trump would like to support the Keystone XL pipeline for Canadian oil to the Gulf Coast ports, which add the heavy oil from Alberta to the domestic production of shale oil. The more they have in the USA, the more they sell to their Asian customers. However, Americans, even headed by Donald Trump, are not the one and only power in the energy sources area. The markets are affected by another strong factor that is the cutoff in OPEC and its allies according to the deal.
The cutoff indeed
The Fatih Birol, executive director of International Energy Association (Paris) declared 2017 “the year of volatility”. This is Ok, we used to the oil volatility. In comparison with February 2016, the prices gain 69% from $26 to $53.86. In January 2016 the OPEC output declines to 32.3 million barrels daily, Bloomberg said. Russians cut off 100,000 barrels every day in January and would like to continue, especially reduce oil delivery to Belarus, Russian Energy Minister Alexander Novak said. The budget of Russia for 2017 – 2019 based on $40 per barrel reflect realistic view on the market trends. The decline of the output is welcomed by public, but at some point Americans will push their shale oil industry and will spoil the solidarity of petroleum exporters intervening into the calm and friendly market. And Chinese will succumb to temptation to increase the production and to purchase less. Thus, nothing good lasts forever.
Iranians “don't appreciate how "kind" President Obama was to them”
Tehran has tested ballistic missile, offering excuses about supporting the agreement not to develop their nuclear program. President Donald Trump imposed fresh sanctions and threatened to return to “unkind” policy of his own instead of previous liberality of Barak Obama. The commodity markets reacted by hiking ask for oil, the prices rose up on Friday.
One of the first order signed by the new President deals with a pipeline from Canadian Alberta to U.S. ports. Keystone XL and Dakota Access oil pipelines will expand energy infrastructure. The quicker route will open access for Canadian oil to the U.S. market and further, that is remarkable. However, the market does not want to adopt the Canadian product, planning to expand its own industry.
Oil rigs reach 583, that was the last time in October 23 2016, according to Baker Hughes. In crude oil American inventories 6.5 million barrels were shown at the end of the week. So why does the administration need the better pipeline from Canada? The Keystone XL will affect environment, Indian tribes protested against the oil route laying on their territory. Donald Trump "appears to be ignoring the law, public sentiment and ethical considerations" with the decision, said president of nonprofit environmental law organization Earthjustice Trip Van Noppen. The U.S. president owns shares of ETP, which involved in building the pipeline. He claimed there will be a lot of new jobs for the U.S. citizens, and profit for TransCanada. So what is the first?
Anyway, oil market will show some surprises this year.