Oil rises and continues to trade near 9-month peak

Crude Oil price (March Brent futures) at 14:50 GMT on Tuesday 29 December, 3 up 1.4% to $51.61 a barrel brent. The “black gold” market continues to fluctuate near the 9-month high ($52.48) set on December 18.

Support for risky assets including oil comes from growing hopes of recovery in the global economy following the approval of a $900 billion U.S. economic aid package. Demand for risky assets is also supported by news of a Brexit trade deal between the UK and the EU. At the same time, market participants note that OPEC is likely to decide to increase total production by 500,000 barrels per day after its January 4 meeting. Demand for oil has not yet increased by about 7-8 million barrels per day compared to the pre-crisis period, but will increase by 5-6 million barrels per day by 2020, experts estimate. Meanwhile, the Iranian national gas company halved its gas supply to Iraq, explaining that the Iraqi side’s large debt to repay the supplies. The Iraqi Energy Ministry owes Iran more than five billion dollars: three billion dollars blocked in Iraq and more than two billion have still not been paid. In addition, Iraq owes Iran more than $1 billion for “treaty violations.”

Iraqi Energy Ministry spokesman Ahmad Musa said Iran plans to reduce gas supplies to Iraq from five to three million cubic meters, which could almost completely deprive Baghdadi of electricity. As a result, Baghdad and the central region of the Euphrates may be without electricity.