Oil rises more than 2 percent as U.S. sanctions on Iran squeeze supply
By Trend
Oil prices rose more than 2 percent on Tuesday as U.S. sanctions squeezed Iranian crude exports, tightening global supply despite efforts by Washington to get other producers to increase output, Reuters reported.
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. As the Nov. 4 date for imposing sanctions draws nearer, the premium has increased.
“The fear is that the sanctions could be so successful that it takes more oil off the market than the OPEC and non-OPEC producers can make up for,” said Andrew Lipow, president of Lipow Oil Associates in Houston.
Brent crude LCOc1 futures rose $1.67 to $79.04 a barrel, a 2.2 percent gain, by 1:10 p.m. EDT (1710 GMT).
US West Texas Intermediate (WTI) crude CLc1 futures gained $1.95, or 2.9 percent, to $69.49 a barrel.
Washington has told its allies to reduce imports of Iranian oil and several Asian buyers, including South Korea, Japan and India appear to be falling in line.
But the US government does not want to push up oil prices, which could depress economic activity or even trigger a slowdown in global growth.
US Energy Secretary Rick Perry met Saudi Energy Minister Khalid al-Falih on Monday in Washington, as the Trump administration encourages big oil-producing countries to keep output high. Perry will meet with Russian Energy Minister Alexander Novak on Thursday in Moscow.
Russia, the United States and Saudi Arabia are the world’s three biggest oil producers by far, meeting around a third of the world’s almost 100 million barrels per day (bpd) of daily crude consumption.