Finance
Oil spikes to almost 4-year high as sanctions against Iran loom
Raheb Homavandi/Reuters
-
US crude inventories rose by the most in a year last
week. -
But markets are focused on oil sanctions against Iran
that take effect next month. -
Watch
oil trade in real time here.
Oil prices rallied to near four-year highs Wednesday, erasing
earlier losses as markets weighed the largest rise in US crude
inventories this year against looming oil sanctions against Iran.
Brent,
the international benchmark, rose more than 1.5% to nearly $86
per barrel. West
Texas Intermediate gained nearly $2 a barrel to trade above
$76. Prices had tumbled in earlier trading after the Energy
Information Administration reported an eight-million-barrel rise
in US stockpiles last week.
But the surprise buildup failed to calm supply concerns that have
bolstered prices since President Donald Trump’s
decision in May to withdraw the US from the Iran nuclear
deal.
As part of that move, the State Department has called on buyers
to stop importing barrels from Iran by November. As
the third-largest producer within
OPEC, analysts say cutting off crude exports from
Iran could make maintaining global supply a
challenge.
The Trump administration has looked to Middle Eastern
producers to pick up the slack left by its policy, with Saudi
Arabia agreeing earlier this year to increase its oil output by a
“measurable” amount and OPEC agreeing to reduce compliance with
coordinated supply constraints.
Analysts remain skeptical OPEC and Russia will be able to
offset the expected supply squeeze, especially as Venezuela and
other key oil countries face the risk of output
disruptions.
“Any unforeseen outages…could potentially expose the lack
of OPEC spare capacity at this stage — particularly that of Saudi
Arabia,” JPMorgan wrote in a recent note.
It remains unclear if the US will grant sanction waivers to
countries in an attempt to avoid supply shocks. Administration
officials have said they might look at requests on a case-by-case
basis, while also maintaining that the goal is to cut Iran’s
exports to zero. If no waivers are extended, JPMorgan said oil
prices could quickly rise to $90 per barrel.
Get the latest Oil WTI price here.
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