Oil prices move higher amid Iran deal uncertainty, low U.S. unemployment

Oil prices move higher amid Iran deal uncertainty, low U.S. unemployment
UPI

May 4 (UPI) — Oil prices were trading higher after a strong jobs reports in the U.S. while awaiting a decision by President Donald Trump on the Iran nuclear deal.

Brent crude oil futures for July increased 59 cents to $74.22 per barrel at 11 a.m.

U.S. West Texas Intermediate futures for June were trading up 40 cents at $68.83 per barrel at 11 a.m.

Oil prices also were up Thursday, after Iran’s foreign minister, Mohammad Javad Zarif, said demands to change the 2015 agreement were unacceptable. Trump said he plans to decide by May 12 whether to sign another waiver on sanctions against Iran or scuttle it entirely while working to change the deal.

“We will neither outsource our security nor will we renegotiate or add onto a deal we have already implemented in good faith,” Zarif said in a video. “In contrast, the U.S. has consistently violated the agreement, especially by bullying others from doing business with Iran.”

North Korea criticized the United States on possibly withdrawing from the Iran nuclear deal ahead of an a summit with U.S. leaders, including Trump, regarding its own nuclear testing and relationship with the international community.

“The United States is describing the nuclear agreement as terrible,” Pyongyang’s Workers’ Party newspaper Rodong Sinmun said in a statement Friday. “They are using forceful measures so they can inspect Iranian military bases.”

Last month, the U.S. unemployment rate fell to 3.9 percent, the lowest it’s been since December 2000. The Labor Department showed the number of unemployed persons was 6.3 million and 164,000 jobs were added.

But in the Middle East, including Saudi Arabia, high unemployment rates are hurting growth and economic growth for oil-exporting countries was 1.7 percent last year after hitting 5 percent in 2016.

The International Monetary Fund on Wednesday said growth rates of about 4.9 percent over the next five years for oil-importing Middle Eastern countries “remain too low to effectively reduce unemployment, particularly for young people.” The IMF said sustained growth of 6.2 percent is needed to keep unemployment at its current average rate of 10.

In Saudi Arabia, more than 30 percent of youth are unemployed and close to 80 percent of women don’t work.

Jihad Azour, director of the IMF’s Middle East and Central Asia department, told CNBC reforms “will help them diversify the economy and to prepare for the post-oil era, as well as addressing some of the major challenges… One is how to create jobs, especially for the youth given the level of unemployment that is faced in the region.”

The IMF recommended energy subsidy and public wage bill reforms.

Saudi Arabia, the United Arab Emirates and Bahrain have introduced a 5 percent value-added tax to most goods and services to increase state revenue.

Baker Hughes is expected to release rig counts on Friday, as well. Last week, there were 1,021 rigs, which is eight more than the previous report and an increase of 151 from last year.

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