Brent crude, Nigeria’s oil grade benchmark at the global market, traded above 85 dollars a barrel on Wednesday, fuelled by expectations that U.S. sanctions on Iran will tighten supply and strain the ability of Saudi Arabia and other producers to supply to the international market.
Online reports indicate that already crude exports from Iran, are already falling as the U.S. sanctions kicking in on Nov. 4 deter buyers.
The decrease in Iran’s global supply is reported to be reducing the impact of an OPEC production increase agreed in June.
Brent crude, the global benchmark, was up 38 cents at 85.18 dollars a barrel .U.S. crude was up 24 cents at 75.47 dollars.
As Iranian exports are expected to fall further, analysts believe that there may not be enough spare production capacity in the short term to meet demand gap, potentially requiring large withdrawals from storage.
The Organisation of the Petroleum Exporting Countries (OPEC), together with other oil producers, including Russia, have been limiting supply since 2017 to prevent market glut.
In June, they partially relaxed the cut following U.S. President Donald Trump’s pressure to cool prices.
As it were now, OPEC has so far ruled out any further production increase, beyond delivering the boost agreed in June, in spite of prices rallying further and more pressure from the U. S. President.
Commenting on the crude oil trend on Wednesday, Russia’s Energy Minister, Alexander Novak, said that the market had more or less stabilized, noting however that many uncertainties remain, including the sanctions on Iran which could push prices higher.
The American Petroleum Institute had reported on Tuesday that U.S. crude inventories rose by 907,000 barrels in the week to Sept. 28 to 400.9 million, ahead of today’s official supply report.
