Oil Prices Sink After Trump Ousts John Bolton

U.S. oil prices fell by about a $1 a barrel Tuesday when President Trump announced via

Twitter

that he had asked for and accepted the resignation of National Security Adviser

John Bolton.

Oil prices bounced back some, but still ended lower on a day in which they started out trading up. Crude settled down 45 cents, or 0.8%, at $57.40 a barrel on the New York Mercantile Exchange on Tuesday. Brent crude, the global oil price benchmark, followed a similar trajectory, losing 0.3% to end at $62.38 a barrel on London’s ICE Futures exchange.

Analysts say the departure of Mr. Bolton, a policy hawk who’s been aggressive toward major oil producers Iran and Venezuela, could mean an eventual loosening of U.S. sanctions against both those nations. That in turn could mean more global supply of crude.

“Bolton is a known hawk on Iran, and the market is assuming that opens the door for talks with Iran,” said

Phil Flynn,

senior analyst at the Price Futures Group. Crude production in Venezuela and Iran—both under U.S. export bans—has declined by a combined 2.1 million barrels a day in the past year. That’s helped buoy prices amid concerns that the world is oversupplied with oil. Prices have been shocked higher several times this year amid mounting hostilities between Iran and other nations, including the country’s July seizure of oil tankers that were passing through the Strait of Hormuz, the waterway that connects the Persian Gulf to the Gulf of Oman and an important shipping route for oil. Mr. Bolton has been a longtime proponent of regime change in Iran. In May, he placed direct blame on Tehran for attacks on ships around the Strait. Just before noon on Tuesday Mr. Trump tweeted, “I informed John Bolton last night that his services are no longer needed at the White House. I disagreed strongly with many of his suggestions, as did others in the administration, and therefore I asked John for his resignation, which was given to me this morning.” At that instant, U.S. oil prices dropped by about $1 a barrel, recovering some, but not all, of the decline in subsequent trading. The move reinforced the view that Mr. Trump isn’t eager to engage in any military conflict with Iran, and may even suggest that talks between the U.S. and Iran, following the 2018 U.S. withdrawal from an Iran nuclear deal, are more possible than earlier thought. RBC Capital Markets analyst Helima Croft said that Mr. Bolton’s ouster “could be a catalyst for a material de-escalation in the Iran standoff,” which could result in 700,000 barrels of Iranian oil a day coming back to the market by early next year. Write to Ryan Dezember at ryan.dezember@wsj.com and Dan Molinski at Dan.Molinski@wsj.com

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