Oil Price Rises Three Percent in a Week, Reaching $72

The price of Brent crude oil has increased by three percent in a week, nearing $72 per barrel, due to developments in the Middle East and the strengthening of Chinese production.

U.S. President Donald Trump has intensified pressure on Iran with airstrikes on the Houthis in Yemen, who are supported by Iran. Trump holds Iran responsible for the Houthi counterattacks. As a result, the Iranian oil minister and oil companies from Iran have been added to the U.S. list of further sanctions, as Iran has ‘survived’ previous sanctions because of them.

Iranian oil exports have remained at around 1.5 million barrels per day despite the sanctions. If the U.S. continues to reduce Iranian oil exports to a complete halt, the supply in the market would further decrease, and market prices would rise.

An additional reason for the rise in oil prices comes from China, which is gradually increasing its oil production to the current 14.7 million barrels per day. Financial markets therefore expect a stable oil price at around $75 per barrel despite the adverse effect of U.S. protectionist policies on global trade movements and increased supply from OPEC+.

Aluminum Price Expected to Fall

The price of aluminum is stable on a monthly basis and currently stands at around $2660 per metric ton. The expectation of a price drop is due to the announcement of an EU investigation aimed at protecting the domestic aluminum industry. The investigation was prompted by U.S. tariffs of 25 percent on aluminum imports from the EU.

The government is concerned that the already struggling aluminum industry will suffer an additional blow after cheaper material floods the European market.

In addition to price reductions, market premiums for aluminum have fallen, while they have risen sharply in the U.S. The drop in premiums is significant given that the EU, in its latest sanctions package, announces a restriction on aluminum imports from Russia to 275,000 tons for one year (about 80 percent of last year’s exports), after which it would completely ban aluminum imports from that country.

The price of aluminum could further decline in the remainder of the year towards $2500 per metric ton due to reduced demand following the introduction of U.S. tariffs.