Oil prices hit $70 a barrel as risk to Iran nuclear deal mounts

Brent crude Friday consolidated its fourth consecutive weekly gain, hitting $70 a barrel as heightened geopolitical tension coincides with signs that global producers would continue supply curbs into 2019.

This is according to a Financial Times report monitored by businessamlive.

The report said analysts are also seeing Trump’s appointment of hardliner John Bolton as security adviser helping push crude higher.

The international benchmark has risen above $3.80 a barrel, or more than 5 percent, this week and if these gains hold, it would be the biggest weekly percentage rise since July 2017. The development could actually enhance Nigeria’s earnings, which could help to finance its budget deficits.

US president Donald Trump announced late on Thursday that he had appointed hardliner John Bolton as his national security adviser, raising the chances of a collapse of the nuclear deal with Iran that he has opposed.

This could hit crude exports from Iran, which have rebounded since the country agreed with western powers to curb its nuclear programme in return for an easing of sanctions.

“Combined with the nomination of Mike Pompeo, another hawk, at the State Department, most of the market will conclude that at the minimum the Iranian nuclear deal is dead,” said Olivier Jakob at consultancy Petromatrix.

Bolton’s appointment comes as the president has welcomed Mohammed bin Salman, Saudi Arabia’s Crown Prince to the White House this week. The kingdom has pushed the US to take a harder line in Iran, its archrival in the Middle East.

Separately, Saudi energy minister Khalid al-Falih suggested production cuts led by Opec and Russia could remain in effect into 2019. The curbs have been in place since 2017, but Mr Falih said stockpiles were still above historical average levels.

“If al-Falih believes it necessary to maintain the cuts in 2019, he is essentially conceding that Opec has no scope for raising production,” said Carsten Fritsch at Commerzbank.

There have been mounting concerns that rising US shale production has tempered some of the impact of the supply curbs. The country’s crude production climbed to another record of 10.4m b/d last week, according to weekly US government data.

Still, the report from the US Energy Information Administration showed crude inventories fell unexpectedly last week as imports fell and refineries processed more oil, providing a boost to prices this week.

Oil remained stable despite global equity markets taking a hit as Beijing suggested it was prepared to hit out at new punitive tariffs from the Trump administration on imports from China

Energy market watchers keep a keen eye on such policies because any weakness in trade or economic growth forecasts would have a direct impact on oil demand, which has remained robust in recent years.