Oil reached 78 dollars for the first time in 3.5 years
On the eve of the quotation of oil Brent at the moment almost touched the level 78 for the first time in 3.5 years. Bulls overawed psychological mark, which resulted in a partial profit-taking, but the asset is held positions, showing a willingness to re-attack new barriers after a pause.
Preconditions for the further rise in price there really is. The attention of investors is still focused on Iran and the renewal of us sanctions against the middle Eastern country. Market participants estimate what will be the reductions in global supply after the introduction of restrictions against Tehran, which accounts for 4% of total global supply.
This, coupled with declining production in Venezuela and the ongoing transaction OPEC+ indicates not only the prospects of achieving balance, but also threatens the subsequent distortion of this balance in the direction of the supply shortage, especially if in the middle East we will see the intensification of conflicts.
However, with regard to the potential deficit, Saudi Arabia was quick to say that ready to help and to prevent shortages of supplies. In other words, the Kingdom signaled a willingness to increase production, at such high prices is certainly beneficial to any exporter who are bound by ties of OPEC transaction+.
In this regard, as you get closer to the June summit of the cartel and its allies can intensify speculation weakening of the existing quota, which is not incorporated in market prices, and thus act as a factor limiting bullish potential for prices.
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