US Oil Prices React to Hurricane Threat

Marcus Newton
September 6, 2018

However, according to energy expert John Kilduff, the Iranian sanctions could actually push up the price of crude oil on the West Texas Intermediate by as much as 30% by this winter.

Meanwhile, there are concerns that USA sanctions against Iran, which will target the OPEC-member's oil industry from November, will tighten global supply.

The fall of the rial is primarily due to the country's weak economy and heavy demand for dollars among Iranians, who fear Washington's pullout from the 2015 nuclear deal between Tehran and world powers in May and reinstated US sanctions could shrink Iran's exports.

Brent crude futures LCOc1 fell by 4 cents, to $77.23 a barrel.

"We do not expect oil demand to be materially impacted in the next 6-9 months by economic uncertainty linked to U.S./China trade tensions and recent concerns over emerging markets", he added.

Considering the fact that the U.S. is looking to apply sanctions on Iran, third largest oil producer in OPEC, the sentiments of sanctions are keeping the oil supported.

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"This is because of the US dollar's strength, weighing heavily on emerging market currencies, including the yuan, which in turn has pushed up the costs of all dollar-denominated commodities", he said. U.S. WTI futures were trading at $70.06 per barrel as of 1:05 p.m. HK/SIN, up 0.37 percent.

Traders on Monday apparently also took note of Baker Hughes reporting an increase in US oil rigs for the first time in three weeks, adding two for a total of 862 rigs.

In a speech on June 4, the Leader slammed European governments for expecting the Iranian nation to both tolerate sanctions and give up its nuclear activities, saying that the country can not remain in "nuclear custody" when the sanctions are still in place. The country produced an average of 11.21 MMbopd in August, according to data emailed Sunday by the Russian Energy Ministry's CDU-TEK unit.

Oil prices have stabilized over the last two years largely thanks to a deal between OPEC and non-OPEC oil producers, including Bahrain and Oman, to curb oil output. At these levels, Brent was set to gain 6.5% in the month, and WTI roughly 3.8%. Iran, facing the risk of declining sales of its biggest export, will try to close the Strait of Hormuz, a vital conduit for Middle East shipments, if its own flows are blockaded, a top military official said.

Current conditions have put Brent crude oil just a tad under the psychological $80 level.

Other reports by MaliBehiribAe

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