Oil prices rose on Tuesday in international markets to $73, supported by expectations that U.S. sanctions will reduce Iranian oil exports, overshadowing concerns for global trade due to the conflict between the U.S. and its partners, reports U.S. News and World Report.
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The price of a barrel of oil on the London market rose by 49 cents compared to the previous closing, amounting to $72.70. On the U.S. market, the barrel increased by 43 cents, trading at $65.85.
The U.S. reintroduced sanctions against Iran at the beginning of August, which initially targeted the financial sector, while the oil sector will be affected starting in November.
It is still unclear to what extent the sanctions will impact oil trade.
At the French bank BNP Paribas, it is estimated that the oil production of the Organization of the Petroleum Exporting Countries (OPEC), of which Iran is a member, will fall from an average of 32.1 million barrels per day in 2018 to 31.7 million barrels per day in 2019.
“Prices are supported by the possibility of reduced supply from Iran,” state analysts from Commerzbank in a note to clients.
Most European energy companies are likely to comply with U.S. sanctions, but China has indicated that it will continue to purchase Iranian oil.
Washington offered 11 million barrels of crude oil from strategic reserves yesterday, with delivery dates from October 1 to November 30, to cover any potential shortages related to the expected reduction in Iranian exports.
Expectations of sanctions against Iran have overshadowed the trade conflict between the U.S. and China today, which could threaten global economic growth and thus the consumption of industrial raw materials.
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“It should be clearly stated that trade wars, especially between the two largest economies in the world, are dangerous games that will ultimately affect the demand for oil, and thus oil prices,” warned Tamas Varga from PVM Oil Associates.
A Chinese delegation will arrive in Washington this week for talks on resolving the trade dispute, but U.S. President Donald Trump stated yesterday to Reuters that he does not expect significant progress and that resolving the disagreements “takes time.”
Due to the holiday in the Muslim world, OPEC did not announce this morning what the price of the reference basket of its oil was on Monday. On Friday, it was $70.27.
