Oil settles lower despite Trump withdrawal announcement

"At the moment it's not easy to quantify the possible economic impact of the US withdrawal on European business activities", said the head of the EU's business lobby, Emma Marcegaglia, who called for "legal clarity".

Volumes jumped for all key crude oil futures contracts as investors took new positions and refiners hedged to protect themselves from higher feedstock prices. Its production of about 1.49 million b/d is a drop of around 40 percent over the last two years from 2.35 million b/d, as lower prices and a crippled economy prevent investment.

U.S. West Texas Intermediate settled up 22 cents at $71.36. Yet analysts say Saudi Arabia would like to keep prices rising ahead of the IPO of its state-owned oil giant Saudi Aramco. "There's not a lot of room for error". Because sanctions are at the heart of the deal, it will also have a significant economic impact. "I think we're supported on prices until there's more clarity".

U.S. President Donald Trump said on Tuesday the United States was exiting an global nuclear deal with Iran and would impose new sanctions that seek to reduce oil exports from OPEC's third-largest producer.

Bank of America Corp. said Thursday that $100/bbl for Brent crude, the worldwide benchmark, is a possibility next year.

Before worldwide sanctions were lifted following the nuclear deal in late 2015, Iran's crude exports stood at just one million barrels per day, mostly to Asia and European countries. It will be very hard to maintain the deal without the United States as numerous unilateral USA sanctions, are secondary sanctions that penalise non-American firms for trading with Iran.

Iran's initial response to the news Trump has pulled out was to threaten to restart its uranium enrichment programme with a view to restrating development of nuclear war-heads - an act which would put it odds with the remaining signatories. They will grumble and accept it.

The U.S. Treasury said oil sanctions on Iran won't take effect until November.

But Kloza sees relief in the future because oil production is booming in the U.S. The EIA projects domestic crude production will rise to almost 12 million barrels a day in 2019 - that's a million more barrels of oil a day than the country is expected to produce this year.

Even without disruption to Iran's crude flows, the balance between supply and demand in the oil market has been tightening steadily, especially in Asia, and as top exporter Saudi Arabia and No.1 producer Russian Federation have led efforts since 2017 to withhold oil supplies to prop up prices. Trying to ease market concerns, Saudi Arabia said on Wednesday that it would work with other producers to lessen the impact of any shortage in oil supplies.

At the same time, the analysts said the global economy is growing at a healthy pace and supporting higher demand for oil.

Meanwhile, the Kremlin said that Russian Federation and its ex-Soviet allies will sign a free trade pact with Iran. The sanctions will not only bar USA companies from doing business with Iran, but they also will hurt European and other companies by prohibiting them from using American banks unless they cut links with Iran.

Higher oil prices boost the US economy and employment and increase taxes the federal government collects, according to Zanganeh.

That assumes Saudi oil output will average 10.20 million bpd this year instead of 9.94 million bpd, and that increased geopolitical tensions will lift this year's average oil price $3 a barrel. The agency has raised its forecasts every month since last August.

  • Leroy Wright