Oil prices jump on fear of new U.S. sanctions against Iran

Lawrence Kim
October 17, 2017

Of course, forecasts of growing US production apply their own pressure on oil prices, and for the time being, forecasters seem to be in agreement that USA oil production will indeed continue to grow even if industry executives expect to see fewer rigs.

Goldman says "without the support of other countries, however, it is unlikely that production would decline by 1 million barrels per day to its pre-deal levels or that a drop in exports is imminent".

However, unlike Kurdistan, Iran could create a risk of sustained production disruptions medium term, the bank said.

On Friday, US President Donald Trump ignored the advice of anxious allies and decertified Iran's compliance with the 2015 agreement despite global inspectors say it is.

The Republican-controlled Congress will now have to decide whether to reimpose sanctions on Iran.

Oil markets jumped yesterday on concerns over potential renewed United States sanctions against Iran as well as the conflict in Iraq.

"If the USA does decertify the nuclear deal, and raises the tension, then inevitably some people will say, well, maybe that is a business that I shouldn't be involved in", said Glencore's (GLEN.L) global head of oil, Alex Beard.

Brent crude futures rose 1.08 per cent to $57.79 a barrel while U.S. benchmark West Texas Intermediate (WTI) prices lifted 0.82 per cent to $51.87 a barrel.

Iraq is the second biggest oil producer in the Organisation of the Petroleum Exporting Countries (Opec), and traders were anxious the Kurdish pipeline would be cut off. Iraqi forces are fighting Kurds near oil-rich Kirkuk, with oil fields and a refinery reportedly seized by Iraq.

Drillers cut five oil rigs in the week to October 13, bringing the total count up to 743, the lowest since early June, General Electric Co's Baker Hughes energy services firm said in its closely followed report late on Friday.

An oil rig situated at Louisiana's Lake Pontchartrain was also reported to have exploded injuring six people.

Other reports by Click Lancashire

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