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US sanction on Iran lead to rise in oil prices
Why in the news ?
- Oil prices gained more than 1 percent on Friday, ending a run of weekly declines on signs that Iran sanctions may limit global supply and that a trade war may not curb China’s appetite for U.S. crude.
Details
- Brent crude oil LCOc1 settled up $1.09 a barrel, or 1.5 percent, at $75.82 a barrel. U.S. crude CLc1 was up 89 cents, or 1.3 percent, at $68.72.
- U.S. crude rose more than 4 percent on the week, after seven consecutive declines, and Brent rose 5.3 percent after three weeks of falling prices.
- The U.S. government re-imposed sanctions on Iran this month after withdrawing from a 2015 international nuclear deal.
- Iran is the third-biggest producer in the OPEC , supplying around 2.5 million barrels per day (bpd) of crude and condensate to markets this year, equivalent to about 2.5 percent of global consumption.
- Concerns that an escalating trade war between China and the U.S. could slow economic growth and weigh on crude purchases eased slightly after sources told Reuters that China’s Unipec will resume purchases of U.S. crude oil in October, after a two-month halt due to the fight.
- Worries that Mexico’s incoming administration would not strike a bilateral agreement over NAFTA with the U.S. also weighed on the market.
- At the same time, concerns about global crude supply intensified with signs that U.S. sanctions on Iran are curbing shipments.
Source
The Hindu.