An oil technician in an oil field southwest of Tehran. Photo: AP / Vahid Salemi
ERBIL, Kurdistan Region – Crude oil prices open 2018 as strongest year since 2014 due to recent unrest in Iran coupled with continued supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and Russia.
“Growing unrest in Iran set the table for a bullish start to 2018,” the US-based Schork Report stated in a memo to its clients on Tuesday as reported by Reuters.
Brent Crude increased to $67.18 per barrel with US West Texas Intermediate (WTI) crude increasing to $60.63 per barrel.
For the first time since January 2014, the two benchmark oil companies opened the year above $60 per barrel.
Tensions are high across Iran as people took to the streets for a fifth consecutive day, with hundreds of protesters arrested and the death toll rising to 13.
Even without unrest in the country, a major oil exporter, market prices remain bullish.
An attack on an oil pipeline in Libya last week caused a supply disruption of approximately 100,000 barrels per day (bpd) and a crack in a Forties oil pipeline in early December in the North Sea lost roughly a capacity of around 450,000 bpd.
The Forties oil pipeline in the North Sea returned to full operations on December 30.
“Falling inventories globally and strong economic growth offset the restart of the Forties pipeline and the resumption of production following a pipeline outage in Libya,” said Jeffrey Halley, senior market analysis for Singapore-based Asia/Pacific brokerage firm Oanda.
OPEC and Russia-led production cuts are also tightening the market to raise oil prices which began in January of 2017 and are scheduled to continue through the end of this year.
The only concern for traders that might hamper the outlook for oil prices in 2018 is the rise of US oil production, which is reaching a production rate of nearly 10 million bpd.
“We think US tight oil production growth warrants close monitoring as it could spoil OPEC’s market-balancing efforts, pushing the market into surplus in 2018,” Barclays bank said.