Oil up as looming US sanctions on Iran threaten to hurt supply
Oil rose on Monday as investors remained cautious over the supply outlook mainly due to impending unilateral US sanctions on Iran, although the fallout from global trade tensions limited price gains.
October Brent crude futures were last up 36¢ at $75.12 a barrel by 9.02 a.m. GMT. The September contract expires on Tuesday. US crude futures were up 78¢ at $69.47 a barrel, Reuters reported.
The oil price has been rallying almost uninterruptedly for the past two weeks, in part as looming sanctions on Iran have already started to curtail flows of oil from the country.
“There are a myriad factors to follow at the moment in the oil market but one way or the other we always arrive at the same conclusion. It is the impact of the US sanctions on Iran that will decide the next $15 a barrel,” PVM Oil Associates Tamas Varga said in a note.
The best-case scenario, he added, is that the US provides meaningful sanction waivers in the run-up to the mid-term elections and Iran can sustain only a loss of around 500700,000 barrels per day of exports.
“In case, however, US President Donald Trump plays hardball and puts its allies and foes under maximum pressure the loss of barrels could amount to two million barrels per day.”
With Washington and Beijing at loggerheads over trade, oil prices could struggle this week, analysts said.
“Oil prices could struggle this week,” said Stephen Innes, head of trading APAC at OANDA Brokerage.
“Concerns around the Us-china trade wars continue to weigh on prices, while the halt in Saudi shipments through the Red Sea waterway has seemingly failed to provide a bullish fillip,” he said.