Oil supported by Iran sanction fears, holds near 2014 highs

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The price spread between USA benchmark WTI and Brent has widened to more than $7 a barrel.

However, EIA expects West Texas Intermediate (WTI) crude oil price to average $5/barrel lower than the Brent price this year.

At Nigeria's current crude oil production of two million barrels per day, the country earns estimated $155.080 million (N55.828 billion) at the current exchange rate of N360/$1.

"We expect the EIA report to display bearish results amidst higher rig counts and production levels in the USA", said Singapore-based brokerage Phillip Futures.

Oil eased on Wednesday after a rise in US crude inventory added to signs demand may be slowing in spite of ongoing output cuts by producer group OPEC and imminent USA sanctions against Iran.

Moreover, in a monthly oil market report released Monday, the Organization of the Petroleum Exporting Countries (OPEC) raised its forecast for global oil demand in 2018, expecting the world to consume 98.85 million barrels a day, or 1.65 million barrels a day higher than previous year.

The United States last week withdrew from an worldwide nuclear accord with Iran and announced renewed sanctions against the country. "The loss of Iranian barrels could tighten supplies of Middle Eastern medium-sour crudes and be supportive of Dubai oil, as traders watch for any response from other Gulf producers".

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The data poses worries that near-record high refinery runs may be short-lived.

Senior oil and gas equity analyst Iain Reid at Macquarie Group said that the reason for the market being as tight as it is at the moment is due to Opec failing to "open the floodgates" to compensate for the lost Iranian barrels, but also the decline in production in Venezuela, another Opec nation.

"A rising oil price brings upside price risk to all commodities", Morgan Stanley said in a note to clients this week.

The agency estimates that global oil inventories fell an average of almost 0.6 million barrels per day (bpd) in each of the past five quarters (January 2017 through March 2018).

Global oil supplies could be hit by the decision by the United States to pull out of the Iran nuclear deal, and also by falling production in crisis-hit Venezuela, the IEA said on Wednesday.

Despite these downward forces, the market retains support from OPEC and other producers' production cuts and USA sanctions on Iran.

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