What to Watch

Oil Prices Continue to Rise Fueled by Iran Deal Concerns 

Market jitters over whether President Donald Trump will exit the 2015 nuclear agreement with Iran sent oil contracts soaring, writes the Wall Street Journal’s Biman Mukherji.

Mr. Trump is due to decide by May 12 whether to withdraw from a deal with Iran and six world powers that lifted economic sanctions on Tehran and allowed the country to boost its oil production in exchange for limits on its nuclear program.

On the New York Mercantile Exchange light, sweet crude for June delivery recently was up 1.2% at $70.56 a barrel in the Globex trading session. July Brent crude on London’s ICE Futures exchange rose 1.1% to $75.66.

Rising oil prices this year have taken investors by surprise, Alison Sider and Georgi Kantchev write.

The price of crude has climbed nearly 12% this  year and has reached its highest levels since 2014—a rally that has caught most big banks flat-footed.

Last December, analysts surveyed by The Wall Street Journal predicted that Brent crude, the international benchmark, would average around $57 a barrel in the first quarter. Instead, prices averaged $67.

Crude prices have proven particularly difficult to pin down lately because of factors such as geopolitical risk and the rise of the U.S. shale industry, as well as efforts by the Organization of Petroleum Exporting Countries and external producers to eliminate global supply.

“Forecasts can be upended by unexpected events—it’s your best call at a point in time,” said Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas.

Energy News

Glencore Scraps Planned Sale of $9 Billion Stake in Russian Oil Company

 Mining giant Glencore PLC and Qatar walked back plans to sell an almost $9 billion stake in Russian state oil company PAO Rosneft to CEFC China Energy Co., a once-high-flying Chinese firm now embroiled in legal woes.

European Countries Seek Tough New Truck Emissions Targets

 A handful of countries in the European Union are seeking far-reaching carbon emissions targets for trucks in advance of a proposed measure from the EU expected later this month, Reuters reports. Unlike the U.S. and other countries, the EU has no restrictions on emissions from trucks.

“The supply of oil needs to rise in order to satisfy demand, which is likewise growing. If US sanctions end up removing Iranian supply from the market too, the already tight oil market will be in even shorter supply.”

Analysts for Commerzbank

 WSJ Energy In-Depth

 Labor Strikes and Worker Protests Erupt Across Iran

Anger is boiling over in Iran as people have taken to the streets  to protest worsening economic conditions such as high unemployment and rising food prices, reports the WSJ’s Asa Fitch.

There have been hundreds of recent outbreaks of labor unrest in Iran, an indication of deepening discord over the nation’s economic troubles.

Protesters are turning against employers and government leaders who promised but failed to deliver better times in the two years since economic sanctions were lifted in the nuclear deal.

The strain on Iran’s economy may worsen if President Trump decides to pull the U.S. out of the deal with Tehran.

Big Number

834

Oil services firm Baker Hughes reported the U.S. added nine more oil rigs last week for a total of 834, the highest figure since March 2015.

FutureCurve

May 10: Africa Oil & Power is holding its first investor forum in London. The speakers include Pablo Galante Escobar, the head of LNG for Vitol, and Gabriel M. Obiang Lima the minister of mines and hydrocarbons of Equatorial Guinea.

June 5-6th: The London Crude Oil Summit. The speakers include Franco Magnani CEO of Eni Trading and Shipping.

Reporter’s Notebook

The WSJ’s Rhiannon Hoyle on a proposal to restrict overseas sales of U.S. nuclear material. A petition to place limits on US uranium imports hasn’t just frozen demand from American nuclear-power operators but is causing buyers elsewhere to step to the sidelines until there’s clarity on whether the government will investigate the issue. “Since the US market is nearly 1/4 of the world total, there has been a ripple effect globally as utility contracting has nearly dried up,” says Jonathan Hinze, president of nuclear-research firm Ux Consulting. Uranium is down 12% in 2018 to $21/pound and one of the worst-performing commodities of the past year.

WSJ Correspondent Bradley Olson on U.S. oil firm profits.Although many U.S. oil and gas producers managed to post profits in the first quarter of 2018, the results were somewhat mixed, according to analysts at Tudor Pickering Holt & Co. Generally solid results from Anadarko Petroleum, Devon Energy, Chesapeake Energy, Noble Energy and Newfield Exploration were undermined by weaker-than-expected production guidance, higher-than-expected spending or increased amounts of gas production, Tudor Pickering said.