Concerns on the Supply Side Growing
The Wall Street Journal reported on April 7 that the United States is expected to continue allowing five countries to import crude oil from Iran. At present, the United States is banning Iranian oil imports with the exception of the five countries including South Korea and the exception is effective until next month.
The United States banned Iran from exporting crude oil last year and banned Venezuelan oil imports this year. Under the circumstances, Libya, which produces 1.3 million barrels of crude oil a day, is likely to reduce its production and the international oil prices are skyrocketing. The Libyan government forces and the Libyan National Army are currently engaged in battles away from major oil fields, but crude oil exports cannot but be affected if the battles escalate.
Due to the concerns on the supply side, the price of WTI for delivery in May rose 1.6 percent to US$63.08 per barrel, the highest since November 2018, on April 5. Likewise, the price of Brent crude for delivery in June rose 1.4 percent to US$70.48. CNBC reported that the prices may top US$80 per barrel in the second half of this year.
“The Donald Trump administration, which is looking to avoid a rapid rise in oil prices, is likely to allow China, India, Turkey, South Korea and Japan to continue to import crude oil from Iran while telling them to reduce their imports compared to the previous year,” the Wall Street Journal commented.