Published: Thu, October 04, 2018
Money | By Wilma Wheeler

Oil trades near four-year peak ahead of sanctions on Iran

Oil trades near four-year peak ahead of sanctions on Iran

The next three months are a "special situation", given the sanctions on Iranian oil set to begin in early November, which is "already reducing their exports", said Williams.

The news agency on Monday reported that observed shipments of crude and condensate dropped to 1.72 million barrels per day (bpd) in September, down 260,000 bpd from the previous month - the lowest level since February of 2016.

Oil prices have jumped to a four-year high as traders scramble to find alternative sources of crude ahead of United States sanctions against Iran, which come into effect next month.

Crude has rallied about 16 percent since mid-August as supply losses from Iran to Venezuela continued to rattle global markets.

The Organisation of the Petroleum Exporting Countries (OPEC) pumped a 2018 high of 32.85 million barrels per day in September, up by 90,000 bpd from August's revised level. A survey by The Wall Street Journal indicates analysts, on average, are expecting that US crude oil inventories rose by 1.3 million barrels last week.

There had been expectations China would ignore USA sanctions.

Analysts from a UK-based bank believed there is now a growing risk of the crude rising as high as $100 per barrel.

Growing uncertainties over global oil supply have sent prices soaring in NY to their highest level in almost 4 years.

Gasoline pump prices are on the rise in the US, squeezing consumers weeks before critical mid-term elections.

Crude prices have roughly tripled from lows hit in January 2016 after the Organization of the Petroleum Exporting Countries and allies led by Russian Federation cut output.

The oil price is little changed at close to $85 per barrel, Tuesday.

Brent crude LCOc1 futures settled at $82.72 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 futures settled at $73.25 a barrel.

Saudi Arabia, the world's biggest oil exporter and OPEC's de-facto leader, is expected to raise output to the market to offset cuts in Iranian production.

Citigroup Inc. has a warning for US oil investors: American crude prices may tumble to the steepest discount against global benchmark Brent since 2013.

"Until sizable supply is offered up by OPEC, ultimately traders will continue to push the envelope even more", said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.

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