Oil Prices Close to 4-Year Highs on Iran Concerns

Date: 02 October 2018 - 22:20

News ID: ۵۸۰۴۶

NEW YORK (Dispatches) -- Oil prices steadied on Tuesday, remaining close to four-year highs on worries that global supplies will drop due to Washington’s sanctions on Iran.
"This is the market catching its breath,” said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut. The market steadied after rallying in three consecutive sessions.
Still, oil prices drew support from worries that Iranian production will drop sharply after U.S. sanctions go into effect on Nov. 4. Also, global demand has remained strong in the face of trade tensions.
Brent rose 9 cents to $85.07 per barrel by 11:53 a.m. EDT (1553 GMT), a day after reaching a four-year high of $85.45. U.S. West Texas Intermediate (WTI) crude futures were flat at $75.30 a barrel, after earlier touching a four-year high of $75.91.
Crude prices have roughly tripled from lows hit in January 2016 after the Organization of the Petroleum Exporting Countries and allies led by Russia cut output.
Oil market sentiment was lifted by a last-gasp deal to salvage NAFTA as a trilateral pact between the United States, Mexico and Canada. Prices have also been buoyed by looming U.S. sanctions against Iran’s oil industry, which at its peak this year supplied nearly 3 percent of the world’s daily consumption.
A Reuters survey of OPEC production found Iranian output in September fell by 100,000 barrels per day, while production from the group as a whole rose by 90,000 bpd from August.
HSBC said in its fourth-quarter Global Economics outlook that "our oil analysts believe there is now a growing risk it (crude) could touch $100 per barrel.”
Many analysts say OPEC will struggle to cover a decline in exports from Iran. Britain’s Barclays bank, however, said "OPEC has ample spare capacity.”
U.S. President Donald Trump has pledged to bring Iran’s oil exports down to zero, putting himself on a collision course with traditional allies in Europe and the rest of the world which want to maintain trade and other connections with Tehran.
Head of the National Iranian Oil Company (NIOC), however, said on Monday that Iran’s oil production continues with full force and the country has no plans to cut its production despite the looming US sanctions.
Ali Kardor also said Iran is experiencing no issues with receiving income from its oil sales and that the country’s oil income has increased 40 percent in the past year.
Meanwhile, government trade data released in Tokyo on Thursday showed Japan's crude oil imports from Iran jumped 65 percent year on year in August.

It marked the fourth consecutive month of increase, according to Japan’s Ministry of Economy, Trade and Industry (METI), lifting the country’s imports of Iranian crude oil to 177,475 barrels per day.
Russia's Deputy Energy Minister Pavel Sorokin said on Monday his country is unable to increase crude supplies to Asian markets if they face any shortage from the loss of Iranian imports.
On Sunday, Iranian companies signed a contract to build the country’s second oil exports terminal in the southeastern port of Jask.
The facility, being built with an initial investment of 200 million euros on a build-operate-transfer (BOT) basis, will have a capacity to store 10 million barrels of crude, the Iranian Ministry of Petroleum’s Shana news website said.
Iran has told the Europeans that for Tehran to stay in a 2015 international nuclear deal which Trump left in May, the Islamic Republic must be able to sell its oil and get the proceeds.
The EU is working with Russia and China on a new payment mechanism to allow countries to transact with Iran while avoiding U.S. sanctions.
A senior official said on Tuesday Iran’s negotiations with the EU to reach an agreement to sell Iranian oil to Europe are advancing ahead of the U.S. date to impose sanctions on the Islamic Republic’s energy sector.
"Oil and gas agreements between Iran and Europe have a good momentum and are proceeding well,” Deputy Minister of Petroleum Amir-Hussein Zamaninia told ISNA news agency.