Oil Markets Enter The ‘Red Zone’

Oil markets appear well supplied for now. But stretched producer spare capacity amid expectations of a hardball line from Washington on Iran sanctions means prices could well remain high and volatile until US pipeline constraints ease from mid-2019.

IEA chief Fatih Birol says the oil market is “entering the red zone” with the looming collapse in Iranian exports setting up a potential supply crunch sooner rather than later. “Expensive energy is back, and back at the wrong time” given slowing global economic growth, he says. Speaking at this week’s Oil & Money conference in London, he notes that the slide in the Indian Rupee and other emerging market currencies against the dollar means that in local currency terms prices are already at or near all-time highs: “consumers are hurting,” he says.

Even in dollar terms, “the stars are aligned” for a potential spike to “three digit” prices, says Jeremy Weir, CEO of trading giant Trafigura. (CONTINUED - 1320 WORDS)