Published: Wed, August 08, 2018
Finance | By Loren Pratt

Oil rallies as Iran sanctions kick in

Oil rallies as Iran sanctions kick in

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

This time around, some of Iran's former creative methods in trade with Asian customers, including a barter system which avoids sanctionable transfers to the nation, may also work with the Europeans.

Sweet Brent crude oil futures were at 74.08 dollars per barrel.

Oil prices rose on Tuesday with revived USA sanctions against major crude exporter Iran expected to tighten global supply.

He said: "The Iran sanctions have officially been cast". While China hasn't taken on much US crude because of trade tensions, the United States has been exporting more of its own oil to South Korea and Singapore.

Crude oil prices extended gains Tuesday as the Trump administration's sanctions against Tehran kicked in, setting the stage for a drop-off in production from the world's fifth-largest producer.

US West Texas Intermediate (WTI) crude futures were up 20 cents, or 0.3 per cent, at $69.21 barrel. He added that he expects prices to remain "well-supported" in the near term. President Donald Trump announced in May the U.S. would withdraw from the deal, which offered sanctions relief in exchange for restraints on Tehran's nuclear weapons program.

"Anyone doing business with Iran will NOT be doing business with the United States".

USA sanctions on Iran's energy sector are set to be re-imposed after a 180-day "wind-down period" ending on November 4.

Crude futures briefly rose in post settlement trade, with WTI at $69.07 a barrel, on data from the American Petroleum Institute that showed US crude inventories fell 6 million barrels last week. 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.

"We are going to work with individual countries on a case-by-case basis, but our goal is to reduce the amount of revenue and hard currency going into Iran", a senior USA administration official said on Monday.

United States investment bank Jefferies said in a note that "the Saudi and Russian production surges appear to be more limited" than initially expected, adding that bullish market sentiment was also fuelled by the imminent reinstatement of U.S. sanctions against Iran. "Despite some comments from USA officials on possible exemptions, we believe there has been no shift in the administration's policy stance on Iran".

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

Trump has said Saudi Arabia's ruler King Salman had agreed to his request and would soon raise oil output by up to 2 million barrels per day (bpd) to make up for shortfalls due to Iran.

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