Crude Eases as Iran Once Again Blames Trump For High Prices

Tuesday also saw yet more predictions of $100 oil. File Image / Pixabay

U.S. president Donald Trump once against became the convenient scapegoat for high crude prices on Tuesday, even though they eased slightly after three straight sessions, with Brent falling 18 cents to settle at $84.80 per barrel, and West Texas Intermediate down 7 cents to $75.23 per barrel.

For once, traders seemed relatively unfazed by a Reuters forecast that word that U.S. crude stocks rose about 2 million barrels last week ahead of data from the American Petroleum Institute; indeed, prices remained close to Monday's four year highs, and Gene McGillian, director of market research at Tradition Energy, said of Tuesday's performance, "This is the market catching its breath."

Riding on Monday's wave of analysts predicting oil in the triple digits due to the U.S. sanctions against Iran was HSBC, which said in its fourth-quarter Global Economics outlook released Tuesday, "Our oil analysts believe there is now a growing risk it (crude) could touch $100 per barrel."

However, bringing a much needed calmer outlook to the table was Barclays bank, which argued persuasively that the Organization of the Petroleum Exporting Countries (OPEC) "has ample spare capacity" and that "softening demand growth and new supply should cool the bullish sentiment and push prices lower by the end of the year."

Presumably, nobody would be more satisfied with a tightened global market than Iran, as it would prove that Middle Eastern nations and the U.S. aren't powerful enough to fill the void of crude exports from the Islamic republic; predictably, then, Bijan Zanganeh, oil minister for Iran, on Tuesday reiterated the familiar complaint that "If Trump wants to bring stability to the oil market, he should suspend sanctions on Tehran."

For good measure he added the equally familiar warning that OPEC lacked the capacity to produce more oil to make up for the drop in Iranian sales.

Meanwhile on Tuesday, a source in the Russian government told media that Zanganeh will not be at an energy forum in Moscow that he was scheduled to attend this week.

Finally on Tuesday, Bloomberg reported Goldman Sachs Group's worry that oil may hold above $80  toward the end of the year as Iran's exports plunge and producers pull back from hedging.

However, as if to illustrate the unreliability of the analytical community when it comes to something as volatile as the energy market, Bloomberg also compared a series of Goldman Sach's forecasts between September 25 and October 2: while in September Goldman stated that Brent prices would stabilize between $70-$80 per barrel into year-end, it now is leaning above $80.

Goldman in September also said that OPEC and Russia will offset losses from Iran, but it now believes this may not be possible; and finally, Goldman in September insisted another supply catalyst would be needed for crude prices to "meaningfully" break to the upside, but now it thinks that "weak time spreads and rising long-dated prices support the view the market is pricing tomorrow's problem, not today's problem."

So far this week, the most level-headed observation in the fomentation over the prospect of Iran causing a market tightening came from Paul Nolte, portfolio manager at Kingsview Asset Management, who said with regards to oil reaching the triple digits, "the disappointment might be that, as we all know with energy prices, when they start going up, supply starts showing up."