Markets

Oil Prices Climb Ahead of US Sanctions on Iran

Oil Prices Climb Ahead of US Sanctions on Iran

US West Texas Intermediate (WTI) crude futures rose 93 cents to $70.18 a barrel, a one-week high.

Brent rose above $80 per barrel on Wednesday for the first time since May, spurred by expectations that US sanctions against Iran's oil exports, which will start in November, will tighten global markets.

Since spring when the Trump Administration said it would impose sanctions on Iran, crude traders have priced in a risk premium reflecting the supply shortages that may occur when exports from the third-largest OPEC member are cut.

In New York last night Brent crude, the worldwide benchmark, was trading nearly 1 per cent higher at $79.75 a barrel, a rise of 3 per cent since the start of the month.

Prices extended gains in post-settlement trade after industry data from the American Petroleum Institute showed USA crude inventories slumped 8.6 million barrels last week, versus analysts' forecasts of a 805,000-barrel decrease.

US light crude pushed over $70 due to falling USA crude inventories and production levels.

Oil prices rose on Tuesday amid looming USA sanctions against Iran's petroleum industry, despite efforts by Washington to get other major suppliers to make up for the expected disruption. Perry will meet with Russian Energy Minister Alexander Novak on Thursday in Moscow.




Russian energy minister Alexander Novak on Wednesday warned of the impact of United States sanctions against Iran.

He also warned of the impact of USA sanctions against Iran: "This is a huge uncertainty on the market - how countries, which buy nearly 2 million barrels per day of Iranian oil, will act". Novak did not provide details.

"Markets. are expecting substantial price pressure as Iran sanctions loom", said Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA in Singapore.

Iran's September exports are expected to plunge and "average as little as 1.5 million barrels a day in September according to the preliminary loading program, compared to around 2.8 million barrels a day of oil exports in April and May", Amrita Sen, chief oil analyst at Energy Aspects, said in a note to clients, carried by Bloomberg. Oil production has been hit by attacks on oil facilities and blockades, though previous year it partially recovered to around one million barrels per day.

Major Japanese refiners were said last week to have officially notified Iran that they would halt all imports of Iranian oil for October while they wait for the Japan-U.S. talks on Iranian oil importers to make a permanent decision on how to proceed in November.

USA companies in China are being hurt by tariffs in the growing trade war between Washington and Beijing, according to a survey, prompting US business lobbies to urge President Donald Trump's administration to reconsider its approach.


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