Crude prices continued growing on Friday as Iranian exports fall before the incoming US sanctions against Tehrans oil sector. The decline will likely extend after the sanctions are officially in force.
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Brent oil rose above $82 per barrel, while the US West Texas Intermediate surged to $72.14.
“The fall in Iranian production is set to intensify once the second round of US sanctions come into effect in November,” said Abhishek Kumar, senior analyst at Interfax Europe Ltd, as quoted by Reuters.
Washington is demanding that its allies drop oil purchases from Iran, OPECs third-largest producer, before the sanctions kick in on November 4. As Reuters reports, OPEC and other producers have discussed a possible increase in production.
The amount they are reportedly discussing is 500,000 barrels per day (bpd), which is not enough to offset a possible loss of 1.5 million bpd from Iran. In May, Iran sold 2.71 million bpd abroad, nearly three percent of daily global oil consumption.
The US is rapidly increasing its production. Last week, it hit a record 11.1 million bpd in the week ending, according to data from the Energy Information Administration (EIA). That is an increase of almost a third since 2016.
However, it may not be enough to satisfy the global demand. “Although US oil output is rising, there are early signs of pipeline and shipping constraints, which will limit how much of that is traded globally,” Kumar said.
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