With the turbulent market all across the globe, the crude oil prices have gone down by a fair bit. The crude oil markets actually witnessed their highest weekly decline since March 2015.
The impact of the Greek crises along with the resilient production from US shale is quite heavy on the oil prices. According to the Citugroup energy strategist Chris Main, “There’s not too much conviction in the market in terms of where we’re going, and you have big support to the downside and big resistance to the upside.”
The financial turmoil in Greece has had a great impact on the crude oil prices. It has affected the supply as well as demand fundamentals of crude oil. The global equity and commodity markets are toppling down because of the same.
The crises would have an impact on the value of the euro, which would in turn make the US dollar stronger. However, if the US dollar goes up, the oil prices will go down even further. The reason is simple; crude oil is priced in dollars. The oil prices will be under pressure as long as the US dollar stays firm in its place, according to the investment analyst from Philip Futures in Singapore.
Last week too, the market witnessed a weakness in the oil prices, owing to the crises in Athens. After the Prime Minister of Greece broke the bailout reform talks, calling for a referendum on austerity conditions, the oil prices have been suffering.
Iran nuclear talks also have a great impact on the crude oil prices. The market is anxiously waiting for the Iran nuclear deal to be materialized soon. If the deal is confirmed, it would put 1 million barrels of Iranian crude back in the market.
If the negotiators reach a fair deal for Iran to put a full stop to its nuclear program, it would give flexibility to Iran for unleashing 30 to 40 million barrels of oil. This oil is currently stored in tankers, according to the reports.
Michael Cogen, the head of energy commodities research said, “t’s a substantial amount of oil. It could potentially move the market out of the current range.” The head of commodity analysis at SEB in Oslo stated, “This may be the time when we break lower and into the $50s.”
We will have to wait and see how the Iran nuclear deal is managed and the crude oil prices will be heavily dependent on the same.