Oil hits $80 as Iran fears mount

Oil prices climb as Iran sanctions loom

The rise reflects concern about the impact of USA sanctions against Iran that will target oil exports.

Brent crude futures were last down 23 cents on the day at $78.83 a barrel by 3pm, having touched a session peak of $79.66, the highest since late May, when the price broke above $80.

Brent rose above $80 per barrel during the previous session for the first time since May, spurred by expectations that USA sanctions against Iran's oil exports, which will start in November, will tighten global markets. 4 date for imposing sanctions draws nearer, the premium has increased.

U.S. crude rose 91 cents to $70.16 a barrel. Analysts had expected a decrease of 805,000 barrels.

The Trump administration has invited Chinese officials to restart trade talks, just as Washington prepares to escalate the U.S. The sanctions will target Iran's oil exports from November.

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 with Saudi Energy Minister Khalid al-Falih on Monday in Washington, the US Energy Department said, as the Trump administration encourages big oil-producing countries to keep output high ahead of the renewed sanctions.

"This is a huge uncertainty on the market how countries, which buy nearly 2 million barrels per day (bpd) of Iranian oil, will act".


Russian Energy Minister Alexander Novak said on Tuesday that Russia and a group of producers around the Middle East dominated Organization of the Petroleum Exporting Countries (OPEC) may sign a new long-term cooperation deal at the beginning of December, the TASS news agency reported.

"Going forward, economic uncertainty, and hence questions surrounding global oil demand, coupled with geopolitical tensions, will need to be factored into maintaining a balanced market in the months to come", the report said. Novak did not provide details.

A group of producers around OPEC and Russian Federation have been voluntarily withholding supplies since January 2017 to tighten markets, but with crude prices up by more than 40 percent since then and markets significantly tighter, there has been pressure on Russian Federation and OPEC to raise output.

"Iran is increasingly becoming the preoccupation of the crude market".

U.S. crude inventories C-STK-T-EIA fell 5.3 million barrels in the week to September 7 to 396.2 million barrels, the lowest since February 2015 and about 3 percent below the five-year average for this time of year, the U.S. Energy Information Administration (EIA) said on Wednesday. Oil production has been hit by attacks on oil facilities and blockades, though previous year it partially recovered to around one million barrels per day.

The storm is expected to make landfall on the U.S. East Coast on Friday.

American companies in China are being hurt by tariffs in the growing trade war between Washington and Beijing, according to a survey of hundreds of firms, prompting the US business lobbies behind the poll to urge the Trump administration to reconsider its approach.

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