Oil prices have spiked higher as senior officials at the U.S. State Department encourage ally countries to shun energy imports from Iran, and crude stands at risk of extending the advance from the previous week as it carves a fresh series of higher highs.
Even though theOrganization of the Petroleum Exporting Countries (OPEC) plans to boost production following its 174th meeting, the renewed sanctions on Iran is likely to hit global supply as the Trump administration wants all countries to wind down oil imports from the region by November 4.
Moreover, the unexpected shutdown at Syncrude Canada may keep crude afloat as the major producer is expected to be offline until the end of July, and growing uncertainties surrounding the world economy may fuel higher energy prices as lawmakers in Canada prepare to update their trade policies.
The developments should keep oil bid as it curbs the outlook for global supply, and it seems as though OPEC and its allies will take a gradual approach in restoring production as the group combats the ongoing rise in U.S. outputs. Keep in mind, U.S. field production of crude continues to hit record highs, with output climbing to10,900K b/d in the week ending, but recent price action raises the risk for higher energy prices as oil breaks out of a narrow range.
For more in-depth analysis, check out theQ2 Forecast for Oil
Interested in having a broader discussion on current market themes?Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups!
Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.
Want to know what other currency pairs the DailyFX team is watching? Download and review theTop Trading Opportunities for 2018.
--- Written by David Song, Currency Analyst
Follow me on Twitter at @DavidJSong.