Oil Prices Above $72 Amid Expectations of Declining Iranian Exports

Oil prices rose on Friday in international markets above the level of $72, supported by expectations of a decline in Iranian exports due to U.S. sanctions.

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The price of a barrel of oil on the London market rose by 92 cents compared to the previous close, reaching $72.25. In the U.S. market, the barrel increased by 59 cents, selling for $66.05.

Analysts highlight U.S. sanctions on Iran, which affected the financial sector in early August, and crude oil exports are expected to be next in November.

“Iran was still exporting nearly two million barrels of crude oil daily in July, but this is likely to dramatically fall in August, with financial sanctions already in effect. There are three months left until the new round of sanctions, and we expect exports to decline by more than 500,000 barrels per day by the end of the second quarter,” estimate analysts at the U.S. investment bank Jefferies.

They also warn of a “lack of demand” for crude oil and derivatives in emerging markets, explaining it by worsening economic prospects due to trade tensions between the U.S. and China and currency weakening.

At MUFG bank, they note that the weakening of the Turkish lira will further limit the growth of demand for gasoline and diesel this year.

“Although the danger of the crisis spreading to other emerging markets and fears of a slowdown in China seem exaggerated, neither the fundamentals nor market sentiment should support higher commodity prices,” emphasizes Norbert Ruecker from Julius Baer bank.

Signs of slowing demand coincided with indications of increasing supply.

Thus, U.S. government data showed a significant increase in crude oil inventories and production last week.

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“Investors remain cautious as the memory of the sudden rise in U.S. inventories is still fresh,” noted analysts at ANZ bank.

Separately, the Organization of the Petroleum Exporting Countries (OPEC) announced this morning that the price of a barrel of its reference basket of oil was $69.47 on Thursday, meaning it weakened by 30 cents compared to the previous trading day.