Published: Fri, September 28, 2018
Markets | By Otis Pena

Oil eases, but Iran sanctions keep Brent above $80 a barrel

Oil eases, but Iran sanctions keep Brent above $80 a barrel

Daniel Jaeggi, the president of the commodity merchant Mercuria Energy Trading, said that because of the US sanctions against Iran, millions of barrels per day (bpd) of crude oil could be taken out of the market by the end of the fourth quarter this year, making oil prices spike up to $100 a barrel.

The price of Brent crude oil could continue its advance as traders ignore US President Donald Trump's persistent calls for producers to raise their output.

Global benchmark Brent fell 37 cents to $81.50 a barrel by 10:57 a.m. EDT (1457 GMT). And then they take advantage of us by giving us high oil prices.

According to the Goldman analysts, led by Damien Courvalin and Jeffrey Currie, production from other OPEC producers and Russian Federation will offset losses out of Iran.

The price of Brent crude oil has reached its highest since November 2014 and could strengthen further amid concerns that the world's major oil producers would struggle to increase output, as called for repeatedly by US President Donald Trump, even if they wanted to.

The International Energy Agency (IEA) forecasts strong oil demand growth of 1.4 million barrels per day (bpd) this year and 1.5 million bpd in 2019, and said in its most recent report that the market was tightening.

Demand for US petroleum increased to 20.8 million barrels per day in August, up 250,000 barrels per day from July, the American Petroleum Institute reports. Iranian crude oil is now trading at $72.02, roughly up by 1.72%.

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The SPR now holds about 660 million barrels of mostly sour grade crude in underground caverns in Texas and Louisiana. He also accused Iran of sowing chaos and pledged to imposed further sanctions.

Ben Luckock, who is the co-head of oil trading at fellow merchant Trafigura also said that crude oil prices could hike up to $90 per barrel by Christmas and $100 by the start of New Year as the markets tighten.

It could cause Washington to take extraordinary steps, including the use of the Strategic Petroleum Reserve, to cool down the crude oil and other fuel prices ahead of the USA mid-term elections.

Oil producers from OPEC and Russian Federation met over the weekend but ruled out any immediate increase in output.

The US is looking to ease market tensions about global crude supplies, which largely lie at the US administration's feet to begin with.

India is the second largest buyer of Iranian crude after China, accounting for about 30 per cent of total crude exports from the Persian Gulf nation during April-August 2018.

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