Oil Price Jumps to Record High in 2019

U.S. Secretary of State Mike Pompeo had tough words regarding the country of Iran, during his press conference announcing there will be no extension of waivers for countries purchasing Iranian oil. While some on this list have already ceased purchase from the country — including Greece, Italy and Taiwan — others, including China and India, have not. The deadline has been stated for midnight on May 1st.

This is part of the U.S.’s “pressure campaign” versus Iran, which has been devised to incentivize the major oil-supplying nation “to behave like a normal country.” In specific, state-sponsored terrorism was among the charges leveled by Pompeo at the Iranian regime. This pressure campaign came shortly after the Trump administration tore up the deal the U.S. had previously made with Iran to stop developing nuclear capabilities in exchange for the lifting of sanctions against the country.

In order to keep oil supply flowing with minimal disruption, Pompeo said the U.S. is currently working with Saudi Arabia (Iran’s chief rival in the region) and the United Arab Emirates (U.A.E.), who have committed to keeping more oil in the market. Roughly 2 million barrels per day would have to be pumped in order to make up for the sanction. Crude oil prices are up 2% on this news, at the highs for the year.

Even further, as U.S.-China trade talks continue, this hard line taken regarding China purchasing Iranian oil may potentially aggravate a final deal, which many analysts have been happily anticipating. Prior to the Secretary of State’s announcement this morning, a mid-May trade deal was looking clearer; it will take further examination to see if this new wrinkle may prove to be a stopping point.

More home data is expected out today, in the form of March Existing Home Sales. We look for the new report at 10am ET this morning, with estimates down 3.8% year over year. This will follow last Friday’s Housing Starts and Building Permits data, which missed analysts’ expectations.

Housing Starts came in at -0.3% last month, well below the +0.4% consensus, to 1.139 million seasonally adjusted, annualized units. Expectations were for 1.225 million starts. Building Permits, a forward indicator of future starts, also came up short of estimates: 1.269 million versus 1.3 million anticipated.

Both Halliburton HAL and Kimberly-Clark KMB reported Q1 earnings results ahead of today’s opening bell. While Halliburton met expectations of 23 cents per share, Kimberly-Clark outperformed estimates and rose 4% on the news. Both companies had been carrying Zacks Rank #3 (Hold) ratings ahead of their earnings releases.

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