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Oil prices reach highest level since 2014 before Iran deadline



U.S. The price of oil rose above the $ 70 mark for the first time since 2014. The latest sign that buoyant economic growth and investor concerns about the risk of a Middle East conflict will once again change the global energy industry.

The $ 70 a year milestone victory for Saudi Arabia, which at the end of 2016 led a groundbreaking agreement between the Organization of Petroleum Exporting Countries and other major producers, including Russia. This helped drain a huge oil spill faster than many expected on Wall Street.

The upturn is also a relief for US oil companies, which had to endure an oil spill that led to US crude oil prices of $ 26 in 201

6. US refineries were among the best performing stocks this year, as demand for fuel rises is further expanding.

But supply, demand and stock levels are far from the only factors at work. Oil prices rose nearly 14% last month as president

Donald Trump

The US is likely to resign from an agreement with Iran in 2015 that has eased international sanctions against Iran in return for restrictions on its nuclear program. President Trump tweeted on Monday that he would announce a decision on US participation in the agreement on Tuesday afternoon

. Trump's decision to withdraw from the agreement with Iran suggests further sanctions that could curtail oil production in the country.

"There was this view that we were post-geopolitics" as a result of an oversupplied market, said Helima Croft, head of commodity strategy at RBC Capital Markets. "Now we really see the bill for it."

Rising crude oil prices will put pressure on margins on US carriers such as airlines, railways, trucks and delivery services, which will pay more for fuel after years of cost savings. Automakers may be a cause for concern as SUVs and trucks, which have recently driven US car sales, are becoming less attractive to consumers as prices at the pump edge rose towards $ 3 a gallon.

Light, sweet crude for June delivery rose 1.45% to $ 70.73 on the New York Mercantile Exchange. Brent, the global benchmark, gained 1.74% to $ 76.17. Both benchmarks have been highest since November 2014.

Crown Prince

Mohammed bin Salman

Saudi Arabia wants to reduce world oil prices to at least $ 80, Saudi Arabian leaders said. Higher prices give the Saudis more leeway to enforce a far-reaching economic overhaul, analysts said.

But some OPEC members were more cautious and looked at their future production prospects. Iranian Oil Minister

Bijan Zanganeh

The Wall Street Journal said in March that oil prices are $ 60 an ideal.

There are "countries that fear that a high oil price will actually slow down demand," said Amy Myers Jaffe, a high-ranking member of the Foreign Relations Council. "Looking at the 10-year view, a period of very high oil prices will definitely accelerate the trend away from oil."

Factors outside the control of OPEC have helped to boost oil prices. For example, Venezuela's production has fallen faster than expected as its political and economic crisis worsened. "Every day there is a new story that is not good for its production capacity," said Ms. Croft.

Some analysts have said that geopolitical risk has led to unjustified panic and when fears prove exaggerated Exhaustion

"A de-escalation of geopolitical tensions is likely to trigger an outflow of investors," Citigroup analysts warned last week ,

In the US, slate producers have already plummeted on higher prices, hiring of workers and purchases of equipment. Production has climbed over 10 million barrels a day – the highest ever.

"Higher oil prices are not necessarily bad for the US economy, it's not the same black and white as it used to be," said Joe McMonigle, senior energy policy analyst at Hedgeye Risk Management.

And since a ban on most crude oil exports was lifted in 2015, US crude oil shipments flowed into Europe, Asia, and South America, gaining footholds in markets once dominated by Middle Eastern suppliers.

While US consumers have already begun to pay more for the pump, oil prices would have to rise to $ 80 to $ 100 a barrel before it would narrow down the demand, refine

Valero Energy
Corp.

Said Investors Last Month

But the prospect of higher inflation could put the Federal Reserve under pressure to raise interest rates more aggressively. In March, the Fed's preferred inflation rate rose 2% year-on-year, the largest monthly increase since February 2017.

"While we do not expect the rise in oil prices to have a major negative impact on the US as a whole Economy … we warn against being too complacent when we assume that growing US energy production is damming the economy, "said Pacific Investment Management Co. in a Monday blog post.

Write to Alison Sider at alison.sider@wsj.com and Stephanie Yang at stephanie.yang@wsj.com


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