After the Federal Reserve announced a 0.75 percentage point interest rate hike on Wednesday, oil prices fell slightly, with prices in the world crude oil market falling by more than 2% overnight.
The good times did not last long. The United States announced yesterday that it would increase sanctions on Iran, mainly targeting its oil exports. World oil prices rose in response. Brent crude oil futures rose by about 1.1% on the 16th, while WTI crude oil rose by about 2%.
Iran also announced that it would raise the price of light crude oil sold to Asia in July by US$6.1 per barrel.
U.S. Treasury Undersecretary Nielsen said in a statement: “The United States is pursuing meaningful diplomatic channels” to achieve the goal of all parties returning to compliance with the Iran nuclear agreement signed in 2015.
However, this so-called “meaningful diplomatic approach” is actually new sanctions. The United States will impose sanctions on several Emirati companies and an Indian who help Iran export crude oil, cutting into Iran’s oil export revenue.
The previous collapse of the Iran nuclear agreement was due to the unilateral withdrawal of the United States, and the responsibility mainly lies with the U.S. government. But now the United States has chosen to use sanctions to threaten Iran to rejoin the agreement, which is not only detrimental to world peace, but will even drag other countries down, because sanctioning Iranian oil will make the entire world oil market pay for it.
In addition, due to political instability, Libya’s oil production has plummeted to less than 150,000 barrels per day, only one-eighth of the level of the same period last year. According to an OPEC+ document, the crude oil production of the organization’s member countries in May was 2.695 million barrels less than the target.
While oil supply continues to shrink, world demand for oil continues to rise. According to the International Energy Agency, crude oil demand is expected to grow by 2% in 2023, reaching a record 101.6 million barrels per day.
Therefore, although oil prices fell slightly on the morning of the 17th due to interest rate hikes by the central banks of the United States, Britain, Switzerland and other countries, the overall situation of the oil market with supply exceeding demand is difficult to improve in the short term, so further rises in oil prices may be inevitable.
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