MARKET WATCH: Crude oil prices rise on US sanctions on Iran
Crude oil prices rose on the New York and London markets on the 6th August as the US government moved forward on the first of two highly anticipated US sanction rounds on Iran.
US President Trump signed an executive order on the 5th August restoring sanctions on Iran which prevent Iran’s government from buying US dollars. The order also bans purchases of Iran’s sovereign debt.
On the 4th November, US officials will decide whether to issue a waiver to all or specific importers of Iranian oil for six months. Sara Vakhshouri of SVB Energy International in Washington, DC, told reporters she believes Iran’s oil exports will show higher decline in September as buyers of Iranian oil try to avoid antagonizing US officials.
“The first round of sanctions…put severe limitation on transactions with Iran and insurance on oil tankers,” making it hard for Iran to sell its oil, Ms Vakhshouri said.
She noted that importers of Iranian oil already are reducing oil purchases from Iran to prove to the US government that they markedly reduced their Iranian crude imports by the 4th November.
In May President Trump announced a US exit from an international agreement which lifted sanctions in exchange for Iran’s cooperation on its nuclear programme.
Some analysts estimate Iran’s 2.5 million b/d of crude exports could fall by one million b/d if US sanctions are implemented as expected. Mr Trump has said he is willing to talk with Iran, but Iran has resisted that notion.
Norbert Ruecker with Julius Baer commodity research told the Wall Street Journal that he believes, “a full embargo seems unlikely” on Iranian oil exports.
Energy Prices
The light, sweet crude contract for September delivery on the New York Mercantile Exchange rose by 52¢ to close at US$69.01/bbl on the 6th August. The October contract gained 59¢ to settle at US$67.94/bbl.
The NYMEX natural gas price for September gained less than 1¢ to a rounded US$2.86/MMbtu. The Henry Hub cash gas price gained 4¢ to US$2.86/MMbtu.
Ultralow-sulphur diesel for September increased 1¢ to a rounded US$2.14/gal. The NYMEX reformulated gasoline blend-stock for September edged down less than 1¢ to remain at a rounded US$2.06/gal.
Brent crude oil for October increased 54¢ to US $73.75/bbl on London’s International Commodity Exchange. The November contract gained 54¢ to settle at US$74.07/bbl. The gas oil contract for August was US$655.50/tonne, up $5.55.
The OPEC basket of crudes average price for the 6th August was US$72.27/bbl, up 7¢.
Source: Oil & Gas Journal