Oil rises as US sanctions on Iran stir supply worries

08 August, 2018, 12:50 | Author: Billie Castillo
  • Crude Oil Supply

Spot Brent crude oil futures were at $74.08 per barrel at 0624 GMT, up 33 cents, or 0.4 percent, from their last close.

The Iran sanctions have officially been cast.

West Texas Intermediate, the USA benchmark for the price of oil, was up 0.8 percent to $69.56 per barrel.

Iranian President Hassan Rouhani said he had support from the Europeans, China and Russian Federation in regard to a United Nations -backed nuclear agreement that offers sanctions relief in exchange for peaceful commitments from Tehran.

A build in supplies would have a negative impact on the price of oil.

Markets also anticipated an announcement from Washington later on Monday on renewed USA sanctions against major oil exporter Iran. While China hasn't taken on much USA crude because of trade tensions, the United States has been exporting more of its own oil to South Korea and Singapore.

But new data released on Monday showed Saudi Arabia's oil production fell in July by 200,000 bpd from the month earlier.

Some sanctions against Tehran, which had been lifted since 2015 under the Iran nuclear deal, were reimposed Monday. However, there are no actual energy sanctions imposed at this stage, but there will be some due later this year.

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U.S. President Donald Trump tweeted that the sanctions were "the most biting sanctions ever imposed".

"Anyone doing business with Iran will not be doing business with the United States", he stated through his Twitter account.

"You can not order 2 million barrels like ordering a coffee somewhere", Beat Wittmann, a partner at financial consultancy Porta Advisors, told CNBC recently. But with opposition from other signatories of the agreement, especially among European allies, Sayed said it's becoming hard to guess how many barrels will be off the market by November. Administration officials have said they might look at requests on a case-by-case basis, while also maintaining that the goal is to cut Iranian oil imports to zero.

Many countries, including USA allies in Europe as well as China and India, oppose the sanctions, but the US government said it wants as many countries as possible to stop buying Iranian oil.

"The US is pursuing a strategy to aggressively curb Iranian oil exports by November", UBS analysts led by Giovanni Staunovo wrote in a note.

Observers have dismissed Trump's call for Saudi Arabia to abruptly increase oil production as political "noise".

But analysts remain widely skeptical Saudi Arabia would raise output by a large enough amount. OPEC+ countries will increase production by 1 million barrels per day, of which 200,000 bpd will be provided by Russian Federation.



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