U.S. oil hits 4-year peak ahead of sanctions on Iran

Adjust Comment Print

Brent oil prices fell on profit-taking on Tuesday but remained near their highest since November 2014 as markets braced for tighter supply once United States sanctions against Iran kick in next month.

U.S. West Texas Intermediate (WTI) crude futures were up 24 cents, or 0.3 percent, at $75.54 a barrel.

The average cost of gasoline in the USA has risen 60 percent from $1.87 per gallon in February 2016 to nearly $3 in September.

Brent for December settlement fell 37 cents to $84.61 a barrel on the London-based ICE Futures Europe exchange.

Futures were little changed in NY after closing Monday at the highest since November 2014.

Brent has risen by more than 20% from its most recent lows in August, Reuters reported.

US President Donald Trump is calling on the global community to suspend imports of crude from Iran by November, driving up prices globally.

The message was delivered by Ali Kardor, the head of state-run National Iranian Oil Company, who added that his country's oil income has increased 40 percent in the past year and that it may start offering oil via its stock exchange as soon as next week - which would allow private companies to export, thus bypassing the USA sanctions.

"The market continues to move higher on fears that the loss of Iranian exports is not going to be made up", said Gene McGillian, director of market research at Tradition Energy, in Stamford Connecticut.

As of the moment, the market's focus is on the looming sanctions of Washington on Iran, which is slated to take a full swing by November 4 this year.

U.S. sanctions on Iran's energy industry, which come into force on November 4, are created to cut crude exports from the third-biggest producer in OPEC.

With about 1.5 million barrels per day of Iranian oil expected to go offline on Nov 4, prices could "rocket higher with the flashy US$100 per barrel price tag indeed a reasonable-sounding target", he said. China's Sinopec said it halved loadings of Iranian oil in September. "At the same time, the U.S. -Mexico-Canada Agreement is also improving the overall sentiment for oil".

For now, soaring crude prices and weak emerging market currencies, including India's rupee and Indonesia's rupiah, may erode economic growth. Britain's Barclays bank, however, said "OPEC has ample spare capacity".