Energy, Economy

Iran's Oil Surges Third Highest Among Int’l Benchmarks

Iran's Oil Surges Third Highest Among  Int’l Benchmarks
Iran's Oil Surges Third Highest Among  Int’l Benchmarks

Iran's oil price staged the third highest surge among international benchmark crudes in the week to Jan. 26, following the US West Texas Intermediate and Brent.

The price of Iran Heavy, one of the country's main export grades, reached $66.69, up $47 cents from the previous week. The heavy crude price rose higher than its average, which is $65.80, since the start of 2018, Shana reported.

The country's light crude oil fell by 21 cents and reached $68.6 per barrel, while its average price has been $68.61 per barrel since the beginning of 2018.

OPEC basket price of 14 crudes stood at $67.64 a barrel on Friday, compared with $67.23 during the previous week.

According to CNBC, oil fell for a third day on Tuesday, as a rout in global equities triggered losses across bonds, cryptocurrencies and commodities, although the crude price is in positive territory so far this year. Even with Wall Street stocks posting their largest one-day fall since late 2011 on Monday and measures of volatility spiking to multi-year highs, reflecting heightened investor nervousness, oil has not suffered to the same extent. 

Brent crude futures were down 35 cents on the day at $67.27 a barrel, still up 1% so far in 2018. US West Texas Intermediate crude eased by 25 cents to reach $63.90. 

Since the S&P 500 hit a record high on Jan. 26, the index has lost 8%. Oil, in contrast, has lost 4.5%, while cryptocurrency bitcoin has lost half its value. 

A factor that could insulate oil to some extent against a bigger rout is the structure of the forward curve, where the prompt futures contract is trading well above those for delivery further in the future.  “We know that speculative positions both in terms of contracts and in allocated dollars are at an all-time high. Thus, a real pain-trade has not yet hit the oil market,” SEB head of commodity strategy, Bjarne Schieldrop, said. 

“Longs have not yet started to flock to the exit door. If that happens, it will make the buying opportunity even better for the oil consumers who buy oil on the forward curve.” 

Financial markets went into a tailspin on Monday after a sharp rise in US bond yields raised concern over a possible increase in inflation and potentially higher interest rates. 

US S&P 500 futures tumbled 3% in Asian trade on Tuesday, extending Monday’s selloff. 

“Suddenly, inflation has become one of the most talked-about issues in markets,” US bank JPMorgan said in a note. 

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