Amid tension in Ukraine, oil traders bet on deal with Iran

If a deal were to materialize and the currently stored oil was quickly dumped on the market, it could drive prices down, Mr. Bronze said....


If a deal were to materialize and the currently stored oil was quickly dumped on the market, it could drive prices down, Mr. Bronze said. But over time, he added, the world will need Iranian oil. Other analysts, however, say global markets could end up in surplus later in the year.

Traders’ calculations could of course change quickly if war breaks out with Ukraine or if talks with Iran break down.

When it comes to Ukraine, concerns about disruptions focus more on natural gas than oil. Reflecting a tight market and a tense geopolitics, Gas prices in Europe are more than four times higher than a year ago, a situation that puts pressure on energy-intensive households and businesses, such as fertilizer makers and metal producers.

About a third of Europe’s natural gas supply come from Russia, mainly through a network of pipelines. Some analysts doubt that Russian President Vladimir V. Putin wants shut off the gas supply to its largest customers, such as Germany and Italy, but pipelines through Ukraine could become collateral damage from battlesand some analysts fear that Mr Putin may further tighten energy supplies to retaliate against Western sanctions.

Analysts say Europe could face a brief disruption in gas supplies from Gazprom, Russia’s gas monopoly. A warm winter during the peak gas consumption period helped. This week, Ursula von der Leyen, President of the European Commission, told reporters“Our models now show that for a partial interruption or further reduction in gas supplies by Gazprom, we are now on the safe side.”

But to prepare for a longer cut, Europe may need to take strong action. Such changes are already happening in today’s tight market.

Liquefied natural gas flow, largely from the United States, have overtaken Russian gas imports to Europe in recent weeks. If Moscow cuts supplies further, Europe will likely ask other suppliers, such as Algeria, Azerbaijan and Norway, to increase flows, analysts say.

Europe could also take other measures, including restarting mothballed coal-fired power plants and postponing scheduled shutdowns of nuclear power plants in Germany. Henning Gloystein, director of Eurasia Group, said businesses could eventually be shut down and, as a last resort, households could see their energy supply rationed.

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Newsrust - US Top News: Amid tension in Ukraine, oil traders bet on deal with Iran
Amid tension in Ukraine, oil traders bet on deal with Iran
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