January 24, 2019 / 6:10 PM / a month ago

Oil traders see more price volatility on Venezuela, Iran

DAVOS, Switzerland (Reuters) - Two of the world’s biggest commodities trading houses, Glencore and Mercuria Energy Group, predict more oil price volatility in coming months due to concerns about supplies from OPEC members Venezuela and Iran.

The logo of commodities trader Glencore is pictured in front of the company's headquarters in Baar, Switzerland, July 18, 2017. REUTERS/Arnd Wiegmann

The United States has reimposed sanctions on Iran, driving down Iranian oil exports, and has threatened to impose sanctions on Venezuela, whose oil producing has been sliding amid political turmoil and an economic crisis.

“I would expect more volatility because of Venezuela. There is speculation about potential U.S. sanctions which could impact flows,” Mercuria Chief Executive Marco Dunand at the World Economic Forum in Davos.

“If you add to Venezuela uncertainty about Iranian sanctions waivers, volatility should come back,” he said.

Washington has granted temporary sanctions waivers, mainly to Asian nations, to allow them to continue importing some Iranian oil.

Dunand said he expected oil prices to trade above $60 a barrel and said the Organization of the Petroleum Exporting Countries would try to prevent them rising above $80.

“OPEC is trying to work under a fairly narrow price band where consumers and producers are happy,” he said.

Benchmark Brent crude was trading around $61 on Thursday.

Glencore’s head of oil, Alex Beard, said he expected oil inventories to build in the first half of 2019 but to drawdown in the second half of 2019.

“A lot will depend on Iranian waivers,” he said. “Saudi Arabia and Russia did a good job to manage the market last year.”

Reporting by Dmitry Zhdannikov; Editing by Edmund Blair

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