Crude oil has surged to its highest value in three-and-a-half years with investors concerned about supplies from Iran, which is facing the re-imposition of sanctions from the United States.
Brent was trading around the $80 per barrel, while the US WTI jumped above $72. Thursday’s jump came after the publication of the Goldman Sachs report, which predicts that America’s surging shale output won’t be able to replace the potential drop in Iranian oil exports after the sanctions against OPEC’s third-largest producer.
“The geopolitical noise and escalation fears are here to stay,” said Norbert Rücker, head of macro and commodity research at Swiss bank Julius Baer, as quoted by Reuters. “Supply concerns are top of mind after the United States left the Iran nuclear deal.”
Oil also strengthened as France’s Total said on Thursday it could quit the exploration of a gigantic multi-billion dollar Iranian South Pars gas field because of the US sanctions. China’s CNPC is said to be a likely substitute in the event Total leaves.
While the glut on the market has been eradicated, OPEC and Russia are not leaving the deal to cut supplies, which can be regarded as a positive sign for the crude market. The US Energy Information Administration reported on Wednesday that American crude stockpiles declined for a second week.