Latest ban against Iran drive current crude oil prices up
Current crude oil prices rose once again as markets dread possible armed conflict within the Persian Gulf.
U.S. President Barack Obama lately imposed more sanctions on Iran planned to curb the latter’s alleged nuclear weapons program. This has led dealers to purchase more crude to ensure sufficient stockpile in case such a conflict breaks out.
Western countries, spearheaded by the U.S., have previously imposed bans on Iran’s financial and energy sector to compel the country to cooperate and discontinue its alleged nuclear weaponry program. Iran, however, denied having such program and warned it will block the Strait of Hormuz if these bans persist.
If Iran pushes through with the blockade and clashes do occur, transport of oil via the Persian Gulf could be delayed or hindered.
The U.S.-led bans, which commenced late last year, triggered a 188,500 bpd decline in Iran’s oil output. As the sanctions took effect, importers of Iran’s crude turned to other countries for their crude supply. OPEC disclosed that Iran’s ranking as the number two OPEC oil producer slid one notch lower a month ago. Iraq now ranks second.
As news of additional sanctions spread, benchmark crude oil price per barrel (pb) rose by 27 cents and settled at $86.08 in New York. On the other hand, Brent crude went up by 84 cents and settled at $101.07 pb in London.
While the earlier sanctions were intended to put pressure on Iran’s energy and financial sector, the very recent ban targets firms, individuals, or groups involved with Iran’s ministry of defense.Top of Form Meanwhile, Bottom of Formsome analysts find it difficult nowadays to track the trend of crude oil prices. This month alone, prices have been taking on various trajectories.
While oil consumption in China, India, and similar emerging economies seem to rise, this growth is downplayed by a slack in U.S. and EU oil consumption.
Tradition Energy oil analyst Gene McGillian said the market isn’t taking a definitive direction at the moment, so experts remain clueless whether an economic recession is indeed on the horizon or an economic recovery is underway.
Viewpoints about the world’s economies have become diverse due to recent data conflicts. Nevertheless, the IEA (International Energy Agency) reported that oil consumption for the rest of the year will increase, although it’s going to be lower than what they had projected in June.
Meanwhile, natural gas futures went up amid declarations by the U.S. that the country’s surplus levels are going down to previous volumes. Natural gas prices in New York inched up by 2.1 cents and closed at $2.874 per thousand cubic feet.
Pump prices of retail gas averaged at $3.384 a gallon. Prices exhibited more stability during the week as disclosed by AAA and Oil Price Info Service.