Oil pushes past $80 as Iran fears mount

Mae Love
September 13, 2018

Oil traders were also watching the progress of category 4 Hurricane Florence, which is expected to make landfall in the USA by Friday.

U.S. West Texas Intermediate (WTI) crude futures were at $67.70 per barrel at 0637 GMT, up 65 cents, or 0.2 percent from their last settlement.

Iran's key customers in Asia-no.1 China and no.2 India-are not expected to cut off their imports of Iranian oil, although India may reduce some of its Iranian intake as it tries to maneuver between cheap Iranian crude and the US pressure to have Iran's oil exports down to zero.

Oil cut earlier losses and rose towards its highest level this year on Wednesday, after a drop in US crude inventories and as the prospect of the loss of Iranian supply added to concerns over the delicate balance between consumption and production.

Since spring when the Trump Administration said it would impose sanctions on Iran, crude traders have priced in a risk premium reflecting the supply shortages that may occur when exports from the third-largest OPEC member are cut.

Washington is putting pressure on other countries to also cut Iran imports, with close allies like South Korea and Japan, but also India, showing signs of falling in line. South Korea says that it continues talks with the USA for a possible waiver. At the moment, the barrel of WTI is trading at $69.30, adding 2.65% on the day.

According to tanker tracking data compiled by Bloomberg, at least five tankers owned by the National Iranian Tanker Company (NITC) have been sitting fully laden with crude oil off the Kharg Island oil terminal in the Persian Gulf over the past two and a half weeks.

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Gordon Gray, of HSBC, warned the market not to rule out a return to $100 a barrel, saying the multi-year price spike is "not out of the question".

In January Brent crude hit $70 a barrel for the first time since December 2014.

Later in the day, the API is going to publish its weekly crude oil stock report, which showed a draw of 1.2 million barrels in the previous week.

"Crude oil production in OPEC rose month-on-month by 278,000 barrels a day in August, to 32.57 million bpd in August", the oil cartel said.

Novak said global oil markets were "fragile" due to geopolitical risks and supply disruptions.

Combined output by these three producers has risen by 3.8 million bpd since September 2014, more than the peak 3 million bpd Iran has managed during the last three years.

US crude inventories fell by 5.3 million barrels in the last week, the US Energy Information Administration said on Wednesday.

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