FX.co ★ Oil on the rise in anticipation of a supply cut and an explosion in demand

Oil steadily rises in value during trading on Monday, which is facilitated by reports of a reduction in supply in the market.

The price of October futures for Brent oil on the London ICE Futures exchange by 12:30 was $101.08 per barrel, that is, it was 0.09% higher than the final indicator of the previous trading day. By 3:07 pm, the benchmark had already risen 2.59% to $101.55 per barrel.

The cost of futures for WTI oil for October in the electronic trading of the New York Mercantile Exchange at 12:30 London time was at around $93.41 per barrel, and by 15:09 it had already added 3.14% to the final value of the previous session's and reached the mark $95.96 per barrel.

Over the weekend, clashes between armed groups took place in the Libyan capital Tripoli, as a result of which more than 20 people were killed. Such a shock may well mean that the North African state is on the verge of another full-scale conflict that could significantly disrupt oil supplies. Thus, the world market is under the threat of an unforeseen reduction in the supply of oil.

At the same time, fears are growing among investors that OPEC countries may decide to sharply reduce the supply of raw materials. Saudi Arabia's Energy Minister made it clear last week that such a possibility is more than real in the current situation in the world. Libya and the Congo support the position of Saudi Arabia, while the problem of oil supplies from Kazakhstan is still not resolved.

In addition, we should not forget about the sharp jump in gas prices in Europe. Less than a week ago, it was trading below $2,900 in Europe, which is already exorbitant. A couple of days ago, the cost of 1,000 cubic meters of gas at ICE reached an unthinkable level - $3,521. Obviously, with such price fluctuations, blue fuel buyers, in an effort to find a cheaper alternative to natural gas, are forced to pay special attention to oil. With a high probability of a reduction in the supply of oil, the risks of a significant increase in demand for it are also very high.

At the same time, the development of the situation around the nuclear deal with Iran remains the main topic. It became known that Iran is ready to put a large amount of oil on the market, but only if all sanctions are lifted from the country's oil and gas sector. Approximately 93 million barrels of Iranian oil is in tankers in the Persian Gulf, off the coast of Singapore, according to data from analyst firm Kpler. Another analytical company (Vortexa, Ltd.) gives different data on the volumes of Iranian oil harvested in tankers - approximately 60-70 million barrels. Kpler also claims that about 48 million barrels of oil are stored in above-ground storage facilities in Iran, and even more oil may be located in above-ground storage facilities throughout China.

To date, Iran has a large oil reserve, which can be put on the market in a fairly short time. At the same time, it is obvious that insurance and shipment of goods with this energy raw material will take some time.

More details on the US-Iran deal are expected on September 2, with an OPEC+ meeting scheduled for September 5.