Oil hits $80, highest in almost four years

Brent prices hit $80 a barrel yesterday for the first time since November 2014 on concerns that Iranian exports could fall due to renewed US sanctions and reduce supply in an already tightening market.

Brent crude futures reached an intraday high of $80.18 a barrel before receding to $79.67 at 1326 GMT. US West Texas Intermediate (WTI) crude futures were up 41 cents at $71.90 after also hitting their highest since November 2014, at $72.30 a barrel.

“The geopolitical noise and escalation fears are here to stay,” said Norbert Rücker, head of macro and commodity research at Swiss bank Julius Baer. “Supply concerns are top of mind after the US left the Iran nuclear deal.” Global inventories of crude oil and refined products dropped sharply in recent months due to robust demand and production cuts by top producing countries.

India’s oil imports from Iran surged to 640,000 barrels per day (bpd) in April, its highest level since October 2016, according to data from shipping and industry sources, as refiners raised purchases ahead of looming US sanctions against Tehran.

Overall, India imported 4.51 million bpd in April, 2.5 per cent higher than a year ago, the data showed.

India’s Iranian imports rose by 49 per cent from March and were 20 per cent higher than a year ago, the data showed. The country is the Iran’s second-biggest buyer of crude after China.

State refiners have raised their imports after Iran agreed to steep shipping discounts.

Iran exported a total 2.6 million bpd of crude in April, a record since the lifting of sanctions in January 2016, according to the news service for the country’s oil ministry.

Going forward, however, Iran’s oil exports are expected to fall. US President Donald Trump earlier in May announced the withdrawal from a 2015 agreement between the United States, Iran and other world powers to limit Iran’s nuclear programme.

The United States intends to renew economic sanctions against Iran, including on the petroleum sector.

India’s Oil Minister Dharmendra Pradhan said on May 12 that it is too early to say how the sanctions will impact India.

In the first four months of 2018, India imported 552,000 bpd from Iran, about 2 per cent less than a year ago, the data from the sources showed. The sources declined to be identified as they were not authorised to speak to the media.