Oil prices climb as Iran sanctions loom

Oil prices climb as Iran sanctions loom

Oil prices climb as Iran sanctions loom

Crude oil prices gained traction on Tuesday and finally staged a decisive recovery with the barrel of West Texas Intermediate breaking above the $69 mark.

The upturn in oil prices come as the United States' sanctions squeezed Iranian crude exports and after the USA crude oil production in 2019 was forecast to grow at a slower rate than previously expected, prompting supply concerns.

Since spring, when the Trump Administration said it would impose sanctions on Iran, traders have been focusing on the impact they could have on global supply.

Benchmark Brent crude futures rose 47 cents to $79.53 a barrel, by 1649 (GMT).

Expect a major oil price rally in November as a direct result of sanctions on Iran, not to mention a moribund Venezuelan oil production, and USA oil reserves falling.

"The path of least resistance for oil prices, given the supply fundamentals, remains up", Harry Tchilinguirian, oil strategist at BNP Paribas, told Reuters Global Oil Forum.

Washington is putting pressure on other countries to also cut Iran imports, with close allies like South Korea and Japan, but also India, showing signs of falling in line.

But the USA government does not want to push up oil prices, which could depress economic activity or even trigger a slowdown in global growth. Perry will meet with Russian Energy Minister Alexander Novak today (Thursday) in Moscow.


He also warned of the impact of United States 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".

"Saudi Arabia, OPEC's largest producer, saw its output rise modestly to 10.40 million bpd, up 38,000 bpd from the previous month, according to secondary sources, S&P Platts reported".

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

A group of producers around OPEC and Russian Federation have been voluntarily withholding supplies since January 2017 to tighten markets, but with crude prices up by more than 40 percent since then and markets significantly tighter, there has been pressure on Russian Federation and OPEC to raise output.

EIA revises down US crude oil output expectations.

USA oil producers are seeking new buyers for crude they used to sell to China before orders slowed because of the trade disputes between Washington and Beijing.

U.S. crude stocks fell 5.3 million barrels in the week to September 7 to 396.2 million barrels, the lowest since February 2015 and about 3 percent below the five-year average for this time of year, the U.S. Energy Information Administration (EIA) said on Wednesday.

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