Pressure on oil prices is exacerbated by a potential increase in Iranian production
On Monday, December 7, oil prices fell by about 1% as rising coronavirus cases and tensions between the U.S. and China undermined the positive impact of the OPEC+ deal on production, Reuters reported.
Brent oil, for example, fell 46 cents, or 0.9% to 48.79 dollars per barrel.
Prices were under pressure after Reuters exclusively reported that the United States is preparing to impose sanctions against at least a dozen Chinese officials for their alleged role in the ousting of Beijing elected opposition lawmakers in Hong Kong.
Growing tensions between the U.S. and China, the world’s largest oil consumers, in recent years, has repeatedly put pressure on the market.
China, the world’s largest crude oil importer, this year helped to support oil prices. In the first 11 months of the year, China imported a total of 503.92 million tons, or 10.98 million barrels per day, which is 9.5% more than the year before.
On a global scale, the rise in coronavirus cases has triggered a series of new lockdowns, including stringent measures in the American state of California, as well as in Germany and South Korea.
According to OPIS, gasoline consumption in the U.S. during the holiday week of Thanksgiving fell to its lowest level in more than 20 years as Americans reduced their travel during the pandemic.
Capital Economics, an economic research company, wrote in its report that OPEC+ production is expected to grow less than the new agreement allows, due to compensation cuts and weak demand in the first quarter.
Following the transaction, OPEC+ Morgan Stanley increased its long-term Brent price forecast from $45 to $47.50 per barrel and raised its long-term WTI price forecast from $42.50 to $45 per barrel.
“Pressure on oil prices is exacerbated by a potential increase in Iran’s production in three months,” said Edward Moya, senior market analyst at OANDA. – Iran is optimistic, expecting the U.S. to ease restrictions if Tehran returns to the 2015 nuclear deal,” Moya said.