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On March 21, following the conditional easing of US sanctions on Iranian oil, an Axios reporter stated that this move would allow Iran to earn approximately $14 billion in oil revenue. This would be the first time the US has purchased Iranian oil since 1996, all during the war with Iran. However, the New York Times points out that it remains unclear whether the limited lifting of sanctions on Iranian oil will affect global oil prices. Energy analysts believe that most of the crude oil shipped by sea has already been purchased and accounted for, meaning that lifting sanctions on this oil will not significantly increase the supply of oil in the market. Former US Treasury official Daniel Tannebaum stated, "I dont think Iranian crude oil will be imported into the United States." He added, "First, the supply of crude oil is a problem because most of it has already been booked; second, which global bank is funding the Iranian oil trade, regardless of whether such trade is legal?"On March 21, Sun Meijun, Director-General of the General Administration of Customs, met with Lee Myung-koo, Director-General of the Korean Customs Service, who was in China to attend the 20th China-Korea Customs Cooperation Conference. The meeting focused on implementing the important consensus reached by the leaders of China and South Korea, deepening customs cooperation between the two countries, and jointly promoting trade security and facilitation in China, South Korea, and the Asia-Pacific region. Three customs cooperation documents were signed. Following the meeting, Zhang Baofeng and Lee Myung-koo co-chaired the 20th China-Korea Customs Cooperation Conference. Both sides exchanged in-depth views on strengthening the partnership in "smart customs," deepening electronic networking of rules of origin, risk management, customs statistics, intellectual property protection, mutual recognition of Authorized Economic Operators (AEO), inter-customs cooperation, and anti-smuggling enforcement cooperation, reaching broad consensus on cooperation.On March 21, according to the US-based "War Zone" website, the Pentagon confirmed that a US F-35A fighter jet operating over Iran made an emergency return and landed at an undisclosed US military airfield in the Middle East. Video released by the Iranian Revolutionary Guard shows the stealth fighter jet being attacked. Foreign media reports suggest this may be the first time an F-35 has been hit in combat since its introduction, setting a new world record for air combat.On March 21, German Chancellor Merz stated at an event in Bad Duckheim, Rhineland-Palatinate, Germany, on March 20 that he had intended to invite US President Trump to the local wine festival in 2026, but he was unsure if Trump would be willing to attend because Trump is currently "not very happy" with him. Furthermore, Merz said that Germany currently holds "completely different views" from the US on some issues. He also stated that the "Make America Great Again" movement is unrelated to other countries, and that Germany holds different views on American culture, media products, and some democratic ideals.On March 21, the Israel Defense Forces (IDF) issued a statement saying that Iran recently launched a ballistic missile carrying a cluster bomb warhead into central Israel. IDF rescue forces stated that Iran launched a ballistic missile carrying a cluster bomb warhead into central Israel, causing damage to three locations in Rishon LeZion.

WTI is rangebound around $74.00 despite escalating recession concerns

Daniel Rogers

Jan 06, 2023 11:11

In the early Tokyo session, West Texas Intermediate (WTI) futures on NYMEX are fluctuating in a limited range around $74.00. The oil price is fighting to acquire a direction after a straight decline to about $73.00 from the important resistance of $81.00.

 

Despite the publication of reliable United States Automatic Data Processing (ADP) Employment Change data, the black gold remained hidden in the woods. According to the organization, the United States economy has generated fresh 235K vs. the forecasts of 150K and the earlier release of 127K.

 

Solid payroll data from the United States is a double-edged sword for the oil price. No doubt, bigger demand for labor force is often essential to cater to bumper demand from companies to address operations, which displays a spectacular requirement of oil to execute operations. On the other hand, a tight US labor market will be hampered by greater wage inflation, which would leave the Federal Reserve (Fed) with no room to consider slowing the rate of policy tightening until the end of CY2023 and could spark recession fears.

 

TD Securities analysts noted in their analysis of the Federal Reserve's December policy meeting minutes that officials were largely in agreement about the need to tighten monetary policy in the near future. Therefore, it anticipates a rate increase of 50 basis points (bps) in February, followed by rate increases of 25 bps in March and May. It is anticipated that the Fed will agree on a target range for the Fed funds rate between 5.25 and 5.50 percent by May."

 

Meanwhile, a considerable pace adopted by the Chinese administration in reopening the economy for spurting the volume of economic activity has resulted in an upside revision of Gross Domestic Product (GDP) predictions. The National Bureau of Statistics increased China's real GDP growth for 2021 from 8.1% to 8.4%, providing a stronger comparison base for 2022. This could result in a future increase in oil prices.

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