Iran was the most dominant topic of this week on the global agenda. After the given 60 days of time to comply with UN resolution on December ended, a new package of sanctions against Iran was voted unanimously by the UN Security Council members on Saturday.
Resolution number 1747 broadens the previous sanction package against Iran. It includes sanctions such as banning exports of conventional weapons from Iran and freezing the assets abroad 28 people and entities including state-owned Bank Sepah and the commanders of the Revolutionary Guards. It has 60 days more to comply with this decision. After all these developments Ahmadinejad on Sunday said that Iran would not suspend its uranium enrichment program.
Moreover, before this package to be voted the tension in the Gulf increased with the capture of 15 Royal Navy personnels by Iran. The incident occurred on Friday. According to British Ministry of Defense these soldiers were seized during a “routine boarding operation in Iraqi waters”. After this incident Britain summoned Iranian ambassador and demanded a safe release of its soldiers with all their equipment. The pressure grows on Iran to free Britons. However, these developments caused a negative impact on crude oil prices and both Brent oil and WTI increased on Friday.
Crude Oil Prices
Source: Financial Times
As can be seen from the graph the Brent reached its highest level since the beginning of this year on Friday and became $63.1. On the other hand, WTI’s decreasing trend tumbled down and it became $61.21. Last week it was claimed by the experts that there is an ample supply of WTI and this causes its prices to decrease. However, according to EIA in the near future the price of WTI will increase further because due to the maintenance of refineries in the Gulf Coast and Midwest in the US the demand for WTI decreased and this will turn to normal in the near future.
Stocks in the US
Source: Energy Information Administration (EIA)
As known every Wednesday EIA announces last week’s available stocks in the US. According to this data the decrease in stocks of distillate oil and gasoline continued last week too. The decrease in gasoline was around 3.5 million barrels in the US. The distillate oil stocks decreased by 1.7 million barrels whereas the crude oil stocks increased 3.9 million barrels in the US.
Gasoline
Source: Energy Information Administration
According to above table gasoline prices are increasing while the stocks of gasoline are decreasing in the US. As stated in the previous weeks there is a similar negative relation between stocks prices as it is for distillate oil.
In addition to increasing tension in the Middle East that affects negatively prices, Bloomberg claims that crude oil prices may rise this week since the refineries will increase production of gasoline due to preparation for coming up driving season which will increase the demand for oil. According to a Bloomberg Survey 22 of the analysts expect a rise in prices while 8 of them expect a decrease for this week.
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