Oil prices shot up as supply panics hit
Brent crude jumped as high as $79.62 on Wednesday, boosted by falling U.S. crude inventories and heightened expectations that U.S. sanctions on Iran would lead to tighter supplies. From a low of $70.3 per barrel on August 15 to a high of $79.62 per barrel on Wednesday, less than a month away.
U.S. crude inventories fell by 8.6 million barrels to 39.59 million barrels in the week ended September 7, the American petroleum institute (API) said on Tuesday. At this point, crude oil production is expected to fall. On crude oil production, the U.S. energy agency (EIA) said on Tuesday that it expects U.S. production to increase by 840,000 BPD/solstice 11.5 million BPD between 2018 and 2019, down from a previous forecast of 1.1 million BPD/d to 11.7 million BPD.
“Oil prices spiked overnight as the API inventory data showed a significant reduction in inventories,” said William O ‘loughlin, investment analyst at Rivkin securities in Australia. In addition, according to CNBC, the founder and chairman of consultancy Facts Global Energy Fereidun Fesheraki, Iran is one of the world’s largest oil exporters, and the resumption of U.S. sanctions on Iran and cutting off Iranian oil supplies will push oil prices above $100 a barrel, as other producers cannot fill the gap.
The impact of us sanctions on Iran is now being closely watched around the world. The U.S. government has pressured other governments to cut Iranian oil imports as well, and many countries and companies have begun to reduce imports, raising expectations of tighter markets. Sources said at least three Asian buyers are now turning to Saudi Arabia for additional oil supplies, Reuters reported on Tuesday. Meanwhile, buyers are demanding more crude oil than October contracts to “hoard for the winter” amid fears that us sanctions on Iran will affect supplies during the Asian winter peak.
Earlier, the international energy agency warned that maintaining global supplies could be “” very challenging” “once U.S. sanctions take effect in November, especially if combined with production problems in other countries.And if U.S. sanctions on Iran are in place, oil prices could rise to $150 a barrel, according to bloomberg.