The United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, ended 2017 with an epic fourth-quarter gain and that bullishness is trickling into 2018 amid new geopolitical tensions. USO is up 5.5% over the past week while the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude oil futures, is higher by nearly 9% over the same period.
Deadly protests in Iran, a member of the Organization of Petroleum Exporting Countries (OPEC), are bolstering oil prices to start 2018. The global market has suffered through a supply glut, but the Organization of Petroleum Exporting Countries and its allies have taken steps to rein in the oversupply.
“The protests in Iran were the main driver of the bullish sentiment in the oil market. Anti-government demonstrations swept across the country in recent days, and unlike the widespread protests in 2009, the current rallies are related to economic woes and are also taking place in more cities than just Tehran,” reports OilPrice.com.
Further gains will be hard to come by as U.S. production threatens to undermine the Organization of Petroleum Exporting Countries’ attempt to cut down the global supply glut. According to the International Energy Agency, the U.S. is expected to account for more than 80% of global oil production growth in the next decade and it will produce 30% more gas than Russia by that time, Reuters reports.
“At least 14 people have been killed in the protests and an estimated 450 have been arrested. It is the most serious challenge to the Iranian government in years, and Iran’s Supreme Leader put the blame on foreign agents, presumably the United States,” according to OilPrice.com.