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Oil hits multi-year high on tight supply, Iran sanctions

Reuters  |  LONDON 

By Christopher Johnson

LONDON (Reuters) - hit a 3-1/2-year high on Tuesday, supported by tight supply and planned U.S. sanctions against that are likely to restrict exports from one of the biggest producers in the

Brent reached an intraday peak of $79.47 a barrel, up $1.24 and its highest since November 2014, before easing to $78.28, up 5 cents, by 1345 GMT.

U.S. light crude was 15 cents lower at $70.81 a barrel, also not far off its highest since November 2014.

World have surged by more than 70 percent over the last year as demand has risen sharply but production has been restricted by the Organization of the Petroleum Exporting Countries, led by Saudi Arabia, and other producers including

Now the has announced it will impose sanctions on over its nuclear programme, raising fears that markets will face shortages later this year when trade restrictions come into effect.

"are touching fresh multi-year highs as robust demand prospects coupled with a tense geopolitical backdrop make for a potent bullish cocktail," said Stephen Brennock,

Norbert Rücker, and commodity research at Julius Baer, said that at the top of everyone's mind was "the potential impact on Iranian and thus the risk of another meaningful supply disruption".

In China, the world's biggest oil importer, refinery runs rose nearly 12 percent in April compared with a year earlier, to around 12.06 million barrels per day (bpd), marking the second-highest level on record on a daily basis, data showed.

The tightening market has all but eliminated a global supply overhang which depressed crude prices between late 2014 and early 2017.

OPEC figures published on Monday showed that in industrialised nations in March fell to 9 million barrels above the five-year average, from 340 million barrels above the average in January 2017.

U.S. crude is trading at a hefty discount to Brent, the international marker, thanks to sharp rises in U.S. production to 10.7 million bpd, which has left the American domestic well supplied.

U.S. is expected to rise by about 145,000 bpd to a record 7.18 million bpd in June, the said on Monday.

The Permian basin in Texas, the biggest U.S. oil patch, is expected to see output climb 78,000 bpd to a fresh record of 3.28 million bpd.

(Additional reporting by in Singapore; Editing by and Dale Hudson)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Tue, May 15 2018. 19:25 IST
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