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US withdrawal from JCPOA to affect oil market

After the US decided to withdraw from the Joint Comprehensive Plan of Action regulating Iran’s nuclear activities, there is a change in the the focus of oil market analysis from the fundamentals to geopolitics. There is a 180-day period for customers to adapt their purchasing strategies and it remains to be seen other aspects of the sanctions will be implemented. When sanctions were imposed, Iran’s exports fell by about 1.2 mb/d. Namely, EIA said: It is too soon to say what will happen this time, but we should examine whether other producers could step in to ensure an orderly flow of oil to the market and offset a disruption to Iranian exports. However, neither Venezuela nor Mexico can raise output in the short term, but some of the 1.5 mb/d that have been reduced by other producers under the Vienna Agreement might be available to keep markets well supplied. In Venezuela, the decline of oil production is accelerating and by the end of this year output could have fallen by several hundred thousand barrels a day. The possible supply shortfall by Iran and Venezuela could cause a major challenge for producers to diverge from sharp price rises and fill the ...

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Oil prices decrease as US production increases

Oil prices decreased on Thursday 3 of May, as a rise in US crude inventories and a record weekly US production was reported, This increase is opposing to the efforts made by OPEC to decrease supplies and tighten the market. The prices were reduced after a report by EIA, which showed that US crude inventories increase by 6.2 million barrels to 435.96 million barrels.

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US port restrictions raise crude oil exports costs

US crude oil exports averaged 1.1 million barrels per day in 2017, an increase of 527,000 b/d from 2016. Despite this acceleration in export growth, the US.Gulf Coast ports cannot fully load Very Large Crude Carriers. Instead, export growth was achieved by using smaller and less cost-effective ships. The Louisiana Offshore Oil Port is the only U.S. facility capable of accommodating a fully loaded VLCC.

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US to achieve record 2018 crude oil production

Annual average US crude oil production reached 9.3 million barrels per day in 2017. EIA projects that U.S. crude oil production will continue to grow in 2018 and 2019, averaging 10.7 million b/d and 11.3 million b/d, respectively. U.S. crude oil production has increased significantly over the past 10 years, mainly because of production from tight rock formations using horizontal drilling and hydraulic fracturing. 

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