(RTTNews) – Extending Friday’s surge, crude oil climbed on Monday as the increasing possibility of U.S. intervention to end the Iran turmoil sets off production disruption concerns. In addition, a dip in the greenback sparked by possible indictment of the U.S. Fed Chair supported prices.
WTI Crude Oil for February delivery was last seen trading up by $0.33 (or 0.51%) at $59.42 per barrel.
In Iran, the civil unrest that began in Tehran over the current regime’s inability to curtail inflation or arrest the fall of the Iranian Rial has spread throughout the nation.
The protests by demonstrators are dealt with severely by the government security forces. Nearly 100 have been killed with more than 10,000 being arrested.
President Donald Trump warned Iran that the U.S. would intervene if the regime unleashes violence on innocent protestors. Iran produces more than 3 million barrels per day.
The uprising has rattled oil markets as analysts are concerned about a possible Iranian block to the Strait of Hormuz, a 21-mile waterway between Iran and Oman, connecting the Persian Gulf to the open ocean which could halt around 20% of the global daily oil supply.
In addition, being the only route for Qatar’s voluminous LNG exports, a blockade would create heating and power shortages in Europe and Asia.
Iranian attempts to close the critical energy chokepoint would likely spark a swift U.S. military response.
Iran’s foreign ministry confirmed talks slated between the U.S. and Iran for Tuesday.
In a new development, the U.S. Federal Reserve revealed that the U.S. Department of Justice has opened proceedings against the U.S. Federal Reserve Chair Jerome Powell on the charges of mismanaging funds for renovation of the Fed’s building last year. The news, seen as an assault on the Fed’s independence, triggered a dip in the U.S. dollar.
The U.S. dollar index was last seen trading at 98.85, down by 0.28 (or 0.28%) today.
Currently, investors are betting at a 95.0% chance of the U.S. Federal Reserve keeping interest rates unchanged at its upcoming January 27-28 FOMC meeting.
Last Wednesday’s U.S. inventory data revealed that crude oil inventories recorded a decline of 3.83 million barrels, exceeding market expectations and hinting at solid demand conditions.
A Reuters survey today indicated that due to reduced supplies from Iran and Venezuela, Iraq, a member of the OPEC+ alliance, has maintained output at a stable level despite its commitment to increase gradually.
The survey also showed that the actual hike by five producers Algeria, Iraq, Kuwait, Saudi Arabia, and the U.A.E., has not exceeded 20,000 barrels per day.
Following Nicolás Maduro’s ouster on January 3 in a dramatic military operation, Trump announced that the current regime would turn over around 50 million barrels of “sanctioned oil” to the U.S. and added that the U.S. oil giants would henceforth have a “liberal access” to Venezuela’s oil reserves.
On Friday, after meeting leaders of big U.S. oil majors, Trump announced that the U.S. would be extracting an unprecedented quantity of oil from Venezuela.
Trump also urged the companies to invest billions of dollars in rebuilding Venezuela’s dilapidated refineries and infrastructure. In return, Trump has assured “total safety and total security” to the companies in Venezuela.
Reportedly, the oil giants have expressed willingness to invest in Venezuela except the CEO of Exxon Mobil, who asserted that Venezuela is currently “un-investible”.
Trump’s administration is working to revoke U.S. sanctions on Venezuela one by one to facilitate the sale.
The U.S. had already seized oil tankers linked to Venezuela ,with Trump stating that the U.S. would sell the oil on the open market.
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