Return to $ 120 for oil amid limited supply

Oil prices have returned to the $ 120 mark as new US sanctions on Iran rule out a return of Tehran to the world market, easing supply pressures.

In particular, the European Brent for August delivery closed with a rise of 1.25% or $ 1.4 with its price forming at $ 119.81 the barrel.

The US crude WTI, which saw its price rise by 2% or $ 2.47, closed even higher and closed at 117.5 dollars the barrel.

In the context of the global sell off in the stock markets, oil prices moved with downward trends for most of the day, but again took the rise towards the close of the session as most forecasts that supply will remain limited for a long time.

According to RJO Futures senior analyst Eli Tesfaye, “much of the issue is just a supply issue and it needs to be resolved.”

“Right now there is no slowdown in global demand, so any fall in prices will be seen as an opportunity and that is what we saw today,” he added.

The International Energy Agency said it expects further demand growth in 2023, by more than 2% to 101.6 million barrels per day. At the same time, oil demand in China is expected to recover as it relaxes restrictions due to COVID-19.

According to analysts, additional pressure was exerted today by the US decision to impose sanctions on companies from China, the UAE and Iran, which help Tehran export biochemicals.

At the same time, Libya’s production has collapsed to 100 to 150 thousand barrels per day, from 1.2 million last year, with analysts worried about the country’s continuing problems that make it difficult to deliver oil.

Theoretically, the Fed raised interest rates yesterday by a staggering 0.75%, and has announced the next increase in July – probably by the same amount – should push prices higher as trading costs rise.

This was done initially but did not last long, as all indications are that limited supply is currently making oil one of the most attractive investment products, which does not seem to be expected to change any time soon.