USA investment bank Jefferies said in a note that it expects Iranian crude oil exports to start falling in the next few months.
It follows a decision by US President Donald Trump to dump a nuclear agreement with Iran and reinstate "the highest level of economic sanctions" on Iranian oil, potentially pulling nearly 1 million barrels of oil a day from the global market. OFAC's guidance makes clear that new business entered into by non-U.S. persons after today's announcement (i.e., those transactions that go beyond wind-down activities) will be taken into consideration in assessing whether such conduct is subsequently sanctionable. Goldman said it is possible that Iran loses 500,000 bpd by the end of the year, which would push up oil prices by more than $6 per barrel.
Other European powers have advocated regaining independence in world affairs in last days.
The diplomatic campaign for keeping the nuclear agreement in place comes a few days after Trump defied protests and last-minute lobbying by his European partners and unilaterally made a decision to withdraw from the historic nuclear accord and impose new sanctions on Tehran.
CNBC has told consumers to prepare for crude oil prices to reach $100 per barrel, with a possibility of prices reaching as high as $150 per barrel on the back of continuing instability in the Middle East. The bank cited geopolitical risks in Saudi Arabia and Venezuela at a time when inventories are falling. Saudi Arabia has said that they would pick up any slack in the market caused by these sanctions, but what about the other OPEC members? "That is emerging and still unknown". It says it will comply with any sanctions. The global benchmark crude traded at a $6.14 premium to July WTI. For the very first time, "Iran recently awarded an upstream oil project to a Russian company". Much of the reason for that stems from the Obama administration's deal with Tehran.
Trump's decision was met with condemnation from European leaders and Russian officials.
As of Thursday, the national average for gas was $2.84 per gallon, up about $0.50 from previous year.
Outside OPEC, U.S. crude production reached another record high last week, hitting 10.7 million bpd which is up 27 percent since mid-2016.
If the oil price were to rise to $US100, it could add a minimum of 21 cents a litre to the average Australian fuel price at the bowser.
Gasoline futures fell 0.12% to $2.1864 a gallon.
According to Credit Suisse, the last time Iran was subject to worldwide sanctions (between 2010 and 2016) its oil exports fell from 2.2 million barrels per day to around 1.1 million barrels.
Trump declared Tuesday that the United States is pulling out of the 2015 agreement with Iran, regarding that nation's nuclear weapons program. To contact the reporter on this story: Jessica Summers in NY at firstname.lastname@example.org.
With assistance from Tsuyoshi Inajima and Alexander Kwiatkowski.
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