Oil Price Fundamental Daily Forecast – More Supply Worries as Iran Claims US Offered to Remove Sanctions

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower on Friday and for the week as concerns over supply and demand growth weigh on prices.

Following a steady to lower opening on Friday, crude oil plunged after Iranian President Hassan Rouhani claimed the U.S. offered to remove all sanctions on Iran in exchange for negotiations. The State Department later denied those claims, causing oil to rebound slightly from the intraday low.

Additionally, a faster than expected recovery in Saudi output and slowing economic growth dampened the demand outlook. Furthermore, the International Energy Agency (IEA) said on Friday that it might cut its estimates for global oil demand for 2019 and 2020 should the global economy weaken further.

At 13:16 GMT, November WTI crude oil is trading $55.42, down $0.99 or -1.76% and December Brent crude oil is at $60.67, down $1.12 or -1.81%.

Iran Claims US Offered to Remove Sanctions

“The German chancellor, the prime minister of England (Britain) and the president of France were in New York and all insisted that this meeting take place. And America says that it will lift the sanctions,” Rouhani said on his official website, according to Reuters. “It was up for debate what sanctions will be lifted and they had said clearly that we lift all sanctions.”

“But this action wasn’t in a manner that was acceptable, meaning that in the atmosphere of sanctions and the existence of sanctions and the toxic atmosphere of maximum pressure, even if we want to negotiate with the Americans in the 5+1 framework, no one can predict what the end and result of this negotiation will be,” Rouhani added.

The State Department called the report “baseless,” adding that the U.S. is committed to zero exports from Iranian regime, Bloomberg News said.

Supply and Demand Worries

On the supply side, easing tensions between Saudi and Yemen could lead to increased supply since it lowers the chances of an escalation of further attacks on Saudi oil fields. The Wall Street Journal reported, citing unnamed sources that Saudi Arabia had agreed to a partial ceasefire in Yemen.

In the meantime, sources told Reuters this week that Saudi Arabia had restored capacity to 11.3 million barrels per day. Saudi Aramco has yet to confirm it is fully back online.

Demand worries also intensified after the IEA said it might cut its estimates for global oil demand.

“If the global economy weakens, for which there are already some signs, we may lower oil demand expectations,” IEA Executive Director Faith Birol told Reuters.