Oil rises on Iran’s new nuclear threats

Oil prices firmed on Monday on tensions over Iran’s nuclear program but gains were capped by concerns about global economic growth and consequently oil demand.

Brent crude futures rose 29 cents, 0.5%, to $64.52 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 40 cents, or 0.7%, to $57.93 a barrel.

Iran on Monday threatened to restart deactivated centrifuges and step up its enrichment of uranium to 20% in a move that further threatens the 2015 nuclear agreement that Washington abandoned last year.

Washington has imposed sanctions that eliminate benefits Iran was meant to receive in return for agreeing to curbs on its nuclear program under the 2015 deal with world powers. The confrontation has brought the United States and Iran close to conflict, with U.S. President Donald Trump calling off air strikes last month minutes before impact.

On Sunday, Trump issued another warning over Iran’s nuclear activities. “They’d better be careful,” he said.

Iran’s Oil Minister Bijan Zanganeh said on Sunday that he was very hopeful of an improvement in the country’s crude exports, state TV reported.

“We see enough possibility of military conflict to cushion renewed price declines that might be driven by mounting expectations for a major slowing in the global economic growth path,” Jim Ritterbusch of Ritterbusch and Associates said in a note.

Oil prices remain under pressure from lingering worries about demand as the U.S.-China trade war has dampened prospects for global economic growth.

Japan’s core machinery orders fell for the first time in four months in May, the biggest monthly drop in eight months in a worrying sign that global trade tensions are taking a toll on corporate investment.

Goldman Sachs said growth in U.S. shale production is likely to outpace that of global demand at least through 2020 and limit gains in oil prices despite output curbs led by the Organization of the Petroleum Exporting Countries.

In a sign of growing concern over demand, investors cut their ICE Brent net long positions by 6,748 contracts to 248,006 in the week to July 2.

CNBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst - The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geopolitical events and monetary policies around the world. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC and Bloomberg, and is often quoted in leading publications including the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University.
Ed Moya