Escalation between Washington and Tehran: the black gold climbs 10% in Asia

SINGAPORE | oil prices climbed very sharply Thursday in Asia, the escalating tensions between Iran and the United States, eclipsing the drying up of demand related to the coronavirus and the saturation of storage facilities.

Around 6: 25 universal time (1: 25 a.m. in Montreal), the barrel of “light sweet crude” (WTI) crude, benchmark u.s. crude for delivery in June, progressed to 1.6 US$, 11,61 % to 15,38 $ in electronic trading.

The barrel of Brent, a european reference, for June, gained $ 2.10, and is 10,31 % to 22,47 $.

The course of the black gold remain at their lowest levels for years, under the impact of a collapse of demand caused by the plunge in economic activity due to restrictions decided on all over the planet to combat the pandemic of COVID-19.

The courts have followed a trajectory worthy of a roller coaster these last few days, which have seen the american oil into negative territory for the first time in its history.

The collapse of global demand has had the effect of filling the storage facilities.

Phillip Futures has explained the current upswing, committed on Wednesday, by “risk strengthened in the Middle East”.

WTI for delivery in June had already jumped 19 % on Wednesday after the declarations of the american president Donald Trump, who warned in a tweet to have given the order to “destroy” any vessel iranian that approached it in a hazardous manner of american ships in the Gulf.

Us reserves rise

According to Washington, eleven speedboats of the revolutionary Guards of Iran have met several times the bow and stern of american ships patrolling in the Gulf, “at a distance extremely close and at high speed”.

Iran also announced on Wednesday the launch of a first satellite in the military, immediately denounced by the United States, which accuse Tehran of developing programs of fire “missiles” that are hidden.

“Iran will be held accountable,” said the head of american diplomacy Mike Pompeo.

The Gulf is a main road for the export of crude oil to the world markets, and any renewed tension inevitably has an upward impact on the prices of the black gold.

This rising tension has overshadowed the weekly report of the u.s. Agency for Energy information (EIA) reported Wednesday an increase of 15 million barrels of us reserves of crude oil.

At Cushing in Oklahoma in particular, where are stored the barrels serving as the reference to WTI, the reserves increased by 5 million barrels and are approaching their maximum.

Us reserves of gasoline and refined products have also increased, while the weekly consumption has fallen by more than 25 % year on year whereas the population is confined.

A “strategy” of Trump ?

Specialists in oil markets, observed, however, Phillip Futures, are suspicious as to the “reasons of the release of the president (Donald Trump) at the time the WTI as the Brent know the crash history.”

“It is very likely that the tweet is embedded in the strategy of his administration to weigh on oil prices,” said Phillip Futures in its note, recalling that the american producers of shale oil had been severely impacted by the fall in the price.

According to analysts, the geopolitical tensions will not have a lasting effect if the reserves are full.

“A price rise depends only on the coordinated action of immediate OPEC to limit the slide to the bottom and/or of an intense and improbable recovery of the demand in may,” said Stephen Innes, a strategist at AxiCorp, referring to the Organization of the petroleum exporting countries and their allies, who agreed in April to reduce their production 10 Mb/d to try to reinvigorate the markets.

But the experts had seen this level insufficient to compensate for the drop in demand induced by the coronavirus, which emerged in China in December, and prices have continued to decline.

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