Oil surges to fresh highs on growing supply worries

12 May, 2018, 20:54 | Author: Natasha Holloway
  • Key buyers of Iranian oil

Oil prices clocked up more multi-year highs on Thursday as traders adjusted to the prospects of renewed United States sanctions against major crude exporter Iran amid an already tightening market.

The head of OPEC has warned that a decision by President Donald Trump to abandon the Iran nuclear deal would harm the global economy.

The Treasury secretary said that the sanctions will also sharply curtail sales of oil by Iran, which is now the world's fifth-largest oil producer.

President Donald Trump's decision to withdraw from the 2015 nuclear deal risks exposing European countries that have since invested in Iran to renewed U.S. sanctions after "wind-down" periods of three to six months expire.

Trump is expected to announce that he will allow sanctions to go forward on Iran, a first step toward withdrawing from the nuclear deal, according to a United States official and a person familiar with the plan.

After Trump indicated that he would not renew the nuclear deal of 2015 with Iran, oil prices jumped three percent. It dropped back below $70 later in electronic trading, after Trump said he would announced his decision on the Iran deal on Tuesday afternoon.

"Investors are increasingly viewing Kuwait and Iraq as the producers with the best ability to raise output quickly in response to any fall in Iranian exports", it added.

"The prime minister raised the potential impact of USA sanctions on those firms which are now conducting business in Iran", her spokeswoman said.

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Among villages affected are those in the farmlands of Nyakinyua, Endao, and Arutani where hundreds of people were displaced. Military helicopters and personnel have for the past week been deployed to rescue people marooned by the flooding .

He said the effects of the USA move were already being felt in rising oil costs and an increase in political uncertainty in the Middle East.

In any case, oil sanctions will kick in in about six months, by which time most Indian refiners "may have consumed most of their Iranian volumes", Ramachandran said.

Brent crude futures were at $77.34 per barrel at 0451 GMT, down 13 cents, or 0.2 percent, from their last close.

Restoring sanctions on Iran could affect as many as 1 million barrels per day of crude supply.

"These sanctions do impact all the major industries (in Iran)".

A number of French firms have have signed billion dollar agreements with Iran since the nuclear accord was signed in 2015.

The Indian oil ministry has not commented on the US pullout, but the foreign ministry on Wednesday called for diplomacy to resolve the dispute over the nuclear deal with Iran. "They are very strong sanctions", Mnuchin said. He said companies doing business in Iran would not be able to generate new business but would be able to wrap up existing contracts.

Iran's surge of exports was likely an "attempt to beat the sanctions", Smith said.

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