OPEC Raises Oil Demand Forecast Amid Global Growth Uncertainty

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The sanctions can restrain Iran ability to export oil, which can shrink the global supply of oil. Following last Friday's sell-off, crude oil prices are no longer looking overbought.

Oil reached $78.28 a barrel on Monday, the highest since November 2014, after the OPEC report was published.

On May 8, President Trump chose to pull the United States out of the Iran Nuclear Deal previously concluded in 2015.

This estimated growth rate was revised higher by 25,000 barrels per day compared to last month's estimates.

"The OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Zafiro (Equatorial Guinea), Rabi Light (Gabon), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela)". The five-year supply average is 420 million barrels.

President Donald Trump is set to announce Tuesday whether the US will waive sanctions against Iran as part of landmark nuclear agreement or exit the deal, a move that experts and officials have said could have a huge impact on oil and gas prices.

The global oil picture has dramatically changed in the past year.

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"Whatever extraneous factor that affects supply or demand, will no doubt send the market into disequilibrium, which is not in the interest of producers, or the interest of consumers", OPEC Secretary General Mohammad Barkindo told CNN Money in a recent interview. While some market observers attribute the energy sector's recent bullishness to the USA departing the Iran nuclear agreement, there are other factors at play.

Speculators are betting heavily that the sanctions will lead to supply disruptions that will make crude oil an attractive enough asset to drive prices to $80 -$100 per barrel later this year. "Oil has scope to appreciate this week on the back of OPEC output cuts, heightened geopolitical tensions, and optimism over stronger global oil demand".

Capital Economics analysts said OPEC is well-positioned to offset any fall in output from Iran caused by the re-imposition of sanctions on the country. "This time around, we expect much less of an impact".

Though somewhat overshadowed, we should not forget about the increased domestic oil production in the United States.

- Oil prices are at four-year highs, raising the price of producing gasoline.

"The latest Baker Hughes rig count report was last seen with another rise of 10 counts to 844 oil rigs that pose as a headwind", IG Markets' market strategist Pan Jingyi said.

The surge in oil prices comes at a time of tight supply amid record Asian demand and voluntary output restraint by the Organization of the Petroleum Exporting Countries and non-OPEC producers including Russian Federation.