Oil price rise a knee-jerk reaction, shouldn’t extend far: Jonathan Barratt, Probis Securities
At these levels, there is more concern for economic growth, says Barratt
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The US sanctions against Iran were put in place in November and a lot of countries had a lot of time to put in alternative measures, said Jonathan Barratt, Chief Investment Officer, Probis Securities, in an interview with ETNOW.
Edited excerpts:
What impact will the end of US sanction waiver on imports from Iran have on the crude markets and also nations importing crude from Iran?
At the end of the day, it was news that we expected. We have got a May 2nd deadline, but Saudi Arabia had certainly said that they would try to make up the shortfall. It is more of a kneejerk reaction at the moment and I do not see it extending too much further from here.
How do you key oil consuming countries getting impacted? Won’t this make the already tight market, tighter going forward?
That is correct. There is a concern about the tightness because we have seen the markets getting quite aggressive but at the end of the day, these sanctions were put in place in November and a lot of countries had a lot of time to put in alternative measures. US is just following through on its announcement. If Saudi Arabia and OPEC review the cutbacks they had imposed then oil flow may not get so tight. It is true that there is tightness in the market at the moment but I would expect some favourable news coming from OPEC and also from the US in terms of its capacity produced and to pump more to the market.
What would it actually mean for OPEC plus? Will they go ahead with output cut or will they have to pause for some time to bring in stability?
Saudi Arabia and OPEC decided to cut supplies when the price of oil was around $52 for Brent a barrel. Now, it is back at $74.50. At the end of the day, there is no reason to have these cuts in prices.
Edited excerpts:
What impact will the end of US sanction waiver on imports from Iran have on the crude markets and also nations importing crude from Iran?
At the end of the day, it was news that we expected. We have got a May 2nd deadline, but Saudi Arabia had certainly said that they would try to make up the shortfall. It is more of a kneejerk reaction at the moment and I do not see it extending too much further from here.
How do you key oil consuming countries getting impacted? Won’t this make the already tight market, tighter going forward?
That is correct. There is a concern about the tightness because we have seen the markets getting quite aggressive but at the end of the day, these sanctions were put in place in November and a lot of countries had a lot of time to put in alternative measures. US is just following through on its announcement. If Saudi Arabia and OPEC review the cutbacks they had imposed then oil flow may not get so tight. It is true that there is tightness in the market at the moment but I would expect some favourable news coming from OPEC and also from the US in terms of its capacity produced and to pump more to the market.
What would it actually mean for OPEC plus? Will they go ahead with output cut or will they have to pause for some time to bring in stability?
Saudi Arabia and OPEC decided to cut supplies when the price of oil was around $52 for Brent a barrel. Now, it is back at $74.50. At the end of the day, there is no reason to have these cuts in prices.
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In order to have a properly balanced market you would expect the same from OPEC plus to say that they will put more supply in the market. At these levels, you would probably find there is more concern for economic growth. I would expect this to be more of a spat rather than a trend. I would like to see prices have a spike from here but I do not see them sustainable.Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
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