Oil trades near four-year peak ahead of US sanctions on Iran

London — Brent oil prices fell on profit-taking on Tuesday but remained near their highest since November 2014 as markets braced for tighter supply once US sanctions against Iran kick in next month.

The international crude oil benchmark lost 37c to $84.61 a barrel by 12pm GMT after reaching a new four-year high of $85.45 in the previous session. US West Texas Intermediate (WTI) crude futures were flat at $75.20 a barrel, having hit a four-year high of $75.91 earlier in the session.

Brent and WTI have roughly tripled compared with lows seen in January 2016, when oil cartel Opec and allies led by Russia started to curb oil supplies to rebalance an oversupplied market.

Sentiment was lifted by a last-gasp deal to salvage what used to be the North American Free Trade Agreement (Nafta) as a trilateral pact between the US, Mexico and Canada, rescuing a $1.2-trillion a year open-trade zone that had been about to collapse.

More fundamentally, oil markets have been pushed up by looming US sanctions against Iran’s oil industry, which, at its most recent peak this year, supplied nearly 3% of the world’s almost 100-million barrels of daily consumption.

A Reuters survey of Opec production found Iranian output in September fell by 100,000 barrels per day (bpd), while production from the group as a whole rose by 90,000 bpd compared with August.

“Oil prices continue to climb, supported by the nearing Iran embargo and related supply concerns,” said Norbert Rücker, head of commodity research at Swiss bank Julius Bär.

Source: businesslive.co.za