Oil price spikes

From oilprice.com:

Tuesday, August 23, 2022

When many started doubting the necessity and viability of OPEC+, the oft-mooted Iranian nuclear deal seems to have given the oil group a new meaning and a new direction. Almost in unison, participant countries and respective top officials have started talking of concerted production cuts should the EU-brokered Iran deal take place anytime soon. Oil prices took notice immediately, recording hefty increases both Monday and Tuesday, with ICE Brent currently trending around the $100 per barrel mark. In effect, nothing has happened yet, but we are already near triple-digit territory.

OPEC+ Starts Talking About Production Cuts. Saudi Energy Minister Prince Abdulaziz bin Salman stated that amidst a possible revival of the Iranian nuclear deal and a growing disconnect between paper and physical markets OPEC+ will consider cutting production at any time and in different forms.

China Heatwave Curbs Industrial Production. All of China’s southwestern regions have extended power consumption curtailments as the country heads into its 12th straight day of extreme heat, so far impacting mostly solar equipment producer JinkoSolar (NYSE:JKS) and battery maker CATL (SHE:300750).

UN Warns of Possible Libya Relapse. The UN Libya mission warned that the ongoing mobilization of forces and increasing threats to use force make it all the more likely that clashes will degenerate into another period of sustained warfare in the war-torn North African country.

I think the Iran nuclear deal was an agreement between Iran and the US to allow its nuclear enrichment facilities to be inspected by independent assessors as a guarantee that Iran was not developing nuclear weapons. The benefit to Iran was the reduction of sanctions. I would have thought that would be bearish for global oil prices, but maybe the OPEC+ sabre rattling overwhelmed that. Iran is part of OPEC+.

Most other commodities followed, even though the dollar remains strong.

Wrap

Indexes nearly all red, apart from Italy (political developments?) and Brazil. Bonds almost all down (yields up) apart from Japan, which doesn’t really have a real bond market any longer. The dollar is at 108.5, and fell a bit (EUR up); practically every commodity currency fell against the dollar. Stocks were mixed, but commodity related stocks up, as you’d expect.

End

I can’t be bothered with writing anything coherent here.