Economy

Oil hits four-year peak ahead of sanctions on Iran

Oil hits four-year peak ahead of sanctions on Iran”

Brent crude, the global oil benchmark, surged on Friday to a fresh 4-year high above $83/bbl as the market braces for the impact of the US energy sanctions on Iran.

Brent crude, against which Nigeria's oil is priced, increased by $1.59 to $84.32 per barrel as of 6:30pm Nigerian time, while US West Texas Intermediate rose by $1.67 to $74.92 per barrel.

Crude has rallied about 16 percent since mid-August as supply losses from Iran to Venezuela continued to rattle global markets.

Worldwide benchmark Brent crude oil futures were at $85.03 per barrel at 0439 GMT, up 5 cents from their last close, and not far off the $85.45 peak reached in the previous session, the highest since November 2014. That kept Brent near the $85.45 peak reached the previous session, its highest since November 2014.

More fundamentally, oil markets have been pushed up by looming USA sanctions against Iran's oil industry, which at its most recent peak this year supplied nearly 3 percent of the world's nearly 100 million barrels of daily consumption.

On Monday, the benchmark Brent crude surged above $83 per barrel.

Crude prices have been mainly lifted by looming United States sanctions that target Iran's oil industry, which at its most recent highest level this year provided nearly 3 percent of the world's almost 100 million barrels of daily consumption. US light crude was up 15 cents at $73.40.

But Japanese bank Mitsubishi UFJ Financial Group said in a note to clients that market risks "are heavily skewed to the upside and whilst we are not explicitly forecasting Brent to rise to $100 per barrel, we see material risks of this coming to fruition".

The pair discussed efforts to maintain supplies to ensure the stability of the oil market and growth of the global economy, plus the strategic partnership between the two countries, Al Arabiya TV reported, without providing more details.

A Reuters survey of oil supply from OPEC countries showed that production in Iran decreased by 100,000 bpd in September to stand at 3.45 million bpd.

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

The US is rapidly increasing its production.

"Even if they (Saudi Arabia) wanted to bend to President Trump's wishes, how much spare capacity does the kingdom have?" said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.



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