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Oil trading trends - Oil prices experienced a slight decline on Tuesday, as economic concerns counteracted the potential upward pressure from the U.S. announcing new sanctions against Iran

Oil trading trends: Volatility hits markets

Oil trading prices eased a bit on Tuesday, amid nervousness over the economy, after the US announced new sanctions against Iran following the Middle Eastern nation’s recent strike on Israel.

Brent crude for June delivery shed 15 cents, or 0.17%, to $89.95 a barrel by 12:26 p.m. EDT, while U.S. crude for May delivery dipped by 8 cents, or 0.09%, to $85.33.

Oil trading trends: Inflation rates in focus

In response, the Federal Reserve Vice Chair Philip Jefferson said: ‘If inflation does not come down as expected on a sustained basis, the [US] central bank’s monetary policy will remain restrictive.’

The price of a barrel of Brent crude had reached $92.18 on April 12 — its highest since October — on fears Iran might retaliate for an April 1 attack on its embassy in Damascus.

Iran’s weekend rocket attack on Israel proved less potent, and the price fell back Monday on economic tensions in addition to those related directly to the Middle East.

Oil trading trends: Middle East Tension hits oil pipeline

Announcing these new sanctions, US Treasury Secretary Janet Yellen also responded to Iran’s actions by announcing new sanctions that ‘will further decrease Iran’s revenue for its oil export pipeline and its ability to use energy revenue for malign pursuits’.

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Oil trading trends: War footing

As Israel’s war cabinet met for the third time in as many days to decide on its course of action in response to Iran, Fiona Cincotta, senior financial market analyst at City Index, said this third meeting alone was adding to nervousness in oil markets.

‘If anything more happens, or there are any further developments, we could see a further risk premium creep into oil prices,’ she said, citing Iran as OPEC’s third largest oil producer.

Latest stock trends: Big Banks, Big profits

Oil trading trends:

The president of Iran, Ebrahim Raisi, also weighed in when he claimed that Iran would respond to any actions carried out against its own interests.

Meanwhile, Israel had previously issued a challengingly vague warning that it would ‘respond forcefully to any Iranian aggression’.

Oil trading trends: Inflation pivot

‘The tug-of-war between sticky inflation, a ‘pivot’ Fed and the slow march towards the cauldron of open regional conflict keeps oil… in its range,’ said Tamas Varga of the oil broker PVM.

He also said it would take a massive disruption to oil production, supply, or shipping to move prices to above $100 a barrel – a target he currently sees as out of reach.

Oil trading trends: US oil stock figures

Meanwhile, investors were awaiting the publication of weekly US oil stock figures from the American Petroleum Institute, due out later on Tuesday.

A preliminary Reuters poll shows a likely increase in US crude and distillate stockpiles and a draw in gasoline stocks.

Oil trading trends: Interest rate cuts

Most Gulf stock markets ended lower on Tuesday as strongly welcomed US retail sales data hinted that the Federal Reserve could put off interest rate cuts this year.

This is bringing some cheer to financial markets ravaged by a global economic slowdown that has seen the central bank cut rates for the first time in more than 10 years.

Hesitation over the possibility of the Fed pausing rate cuts this year caused a rally on Wall Street’s main indexes on Friday, fueled by surprisingly robust US consumer spending in March.

Oil trading trends: Fuel price hikes

A rise in US consumer prices, largely due to higher prices for gasoline and rental housing, had caused financial market watchers to predict the Fed would delay a rate cut until September amid a global economic slowdown.

Gulf currencies are typically pegged to the dollar, and monetary policy changes in the US tend to be reflected in the economic policies of these countries, from Saudi Arabia to the United Arab Emirates and Qatar.

Oil trading trends: Saudi Arabia Index drops

Saudi Arabia’s benchmark Tadawul All Share Index fell 1.6%, hurt by falls among big companies such as Al Rajhi Bank, which dropped 2.9%, and Saudi Aramco, which retreated 1.3%.

Investor unease continued to weigh on market sentiment in the face of calls for restraint over responding to Iran’s recent drone and missile attack on Israel.

Tensions remained high over fears that a conflict in the Middle East could erupt into a broader and catastrophic war.

Oil trading trends: Dubai Stock Index drops

In Dubai, the main stock index declined 1.4%, with Emaar Properties dropping 1.7% and breaching the level of support it has kept intact for the past month.

Joseph Dahrieh of Tickmill, said: ‘Currently, geopolitical tensions and U.S. inflationary pressures are squeezing the market,’ noting that investor sentiment could rise from a planned IPO of the supermarket chain Spinneys.

Abu Dhabi’s benchmark sunk by 0.6%, while Qatar’s benchmark fell by 0.7%, with Industries Qatar leading the way with a 1.2% drop.

Oil trading trends: Oil prices hover near $90

Oil prices continued to hover around the key $90 per barrel mark, as market participants assessed the impact of potential disruptions to global supplies from the Middle East.

Outside the Gulf, Egypt’s blue-chip index also fell by 0.7%, with Talaat Mostafa Holding sinking by 2.6%.

Oil trading trends - Oil prices experienced a slight decline on Tuesday, as economic concerns counteracted the potential upward pressure from the U.S. announcing new sanctions against Iran
Oil trading trends – Oil prices experienced a slight decline on Tuesday, as economic concerns counteracted the potential upward pressure from the U.S. announcing new sanctions against Iran.

Its overall strong performance can be seen in the performance of other bases around the region:

Saudi Arabia’s TASI index fell 1.6% to 12,500.

Abu Dhabi’s FTFADGI index was down 0.6% to 9,194.

Dubai’s DFMGI index dropped 1.4% to 4,184.

Qatar’s QSI index declined 0.7% to 9,853.

Egypt’s EGX30 index lost 0.7% to 29,401.

Bahrain’s BAX index slightly rose by 0.1% to 2,042.

Oman’s MSX30 index increased by 0.2% to 4,738.

Kuwait’s BKP index retreated by 2.8% to 7,569.

Oil trading trends: Sanctions to hit Iran

On Tuesday, the US Treasury secretary Janet Yellen announced that the US will impose further sanctions on Iran in reaction to Iran’s latest round of attacks on Israel.

The new sanctions are intended to further restrict Iran’s ability to export oil.

‘I’m sure that we’ll be taking further sanctions actions against Iran in the coming days,’ Yellen said at a news conference on the sidelines of the International Monetary Fund and World Bank spring meetings.

Such measures, she noted, were aimed at disrupting terrorist financing by Iran.

Yellen said: ‘Nothing is off the table in terms of what we can do in order to try to restrain Iran from using their support of terrorism’, without spelling out what that might entail.

She noted that work continues with the G7 partners as well as other major economies to limit the flow of Iran’s oil exports and its access to microelectronics used in drones.

Those unmanned aircraft not only carried out this week’s strike on Israel but also have been shipped to Russia.

Oil trading trends: Supply disruptions

In her speech, Yellen explained the wider consequences of Iran’s moves: Tehran’s aggressive actions can also harm the Middle East, where they disrupt regional stability and threaten to trigger more severe and damaging spillover effects, including into the global economy.

She outlined how the US had applied financial sanctions to help isolate Iran and prevent it funding proxy groups and supporting Russian aggression in Ukraine.

Yellen also noted that, since the start of the Biden administration, the Treasury has taken aim at more than 500 Iranian-operated people and organisations linked to terror and terrorist.

They have targeted the financing done at the behest of the Iranian regime and its proxy groups – including actions targeting the Islamic Republic’s drone- and missile-procurement schemes and its financial support for groups such as Hamas, the Houthis in Yemen, Hezbollah in Lebanon, and several militia groups in Iraq.

In his remarks at the international meetings, Lew (the US Treasury Secretary) pointed out that ‘the United States will continue to work with the international community to ease the suffering of the people in the Gaza Strip, and more broadly to take actions that will improve the situation in the region.’

He stressed that the application of economic sanctions is a means to an end – and not the other way around. It should not be, for example, an obstacle to necessary humanitarian aid.

Oil trading trends: BP begins production offshore in Caspian Sea

Oil production has begun from a new offshore platform in the Caspian Sea by BP, the news of which the company announced Tuesday.

The move continues to provide extra support to Azerbaijan’s oil production, which has been decreasing.

The Azeri Central East (ACE) platform is the second of the new phase of the prolific Azeri-Chirag-Gunashli (ACG) field, where oil production began on 26 September 1997.

This field has produced more than 4.3 billion barrels to date.

While oil production in Azerbaijan is on the decline (it peaked at a daily output of some 1 million barrels around 2011-12), its output is currently below quota under the OPEC+ – a production reduction agreement negotiated among leaders of the world’s major producers.

ACE, the new algae processing platform and ancillary facilities, is capable of processing up to 100,000 barrels of algae per day, but is expected to only produce up to 300 million barrels in its lifetime.

BP believes that production at ACE will ramp up to 24,000 barrels a day by 2024, when two additional wells have been drilled, completed and brought on-stream.

On Tuesday, the chief executive of Sovcomflot – Russia’s leading shipping group – Igor Tonkovidov said the impact of US sanctions on his company’s business on world markets was palpable.

The sanctions have ‘severely limited the geographical (and, partly, commercial) opportunities of Sovcomflot’, Tonkovidov said.

They came into force on 23 February with the aim of cutting into oil revenue that, at the time, Vladimir Putin’s government said would pay for Russia’s war in Ukraine.

According to Tonkovidov, as far as the shipping industry is concerned, they are a ‘novelty’. They are ‘yet to have a complete effect’.

So the US has stepped up sanctions aimed directly at Moscow – targeting energy exports, whose revenue streams fuel the Russian war machine.

The US Treasury Department’s Office of Foreign Assets Control (OFAC) has also designated 14 tankers carrying crude oil as blocked property of Sovcomflot.