Brent oil rises above $ 80 as sanctions against Iran loom

SINGAPORE (Reuters) – Brent crude oil prices climbed above $ 80 a barrel on Monday, as markets tightened after US sanctions against Iranian crude exports came next month.

The benchmark index for Brent crude oil futures, LCOc1, was $ 80.26 per barrel at 6:46 am GMT, up 48 cents (0.6%) from their last closing price.

The West West Intermediate (WTI) US CLC1 futures price was $ 69.60 per barrel, up 48 cents or 0.7%.

US sanctions against Iran's oil sector, the third largest producer of the Organization of the Petroleum Exporting Countries (OPEC), is expected to begin on Nov. 4. The United States, under the chairmanship of Donald Trump, is trying to reduce Iran's zero oil exports to force the country to renegotiate an agreement on its nuclear program.

US Treasury Secretary Steven Mnuchin told Reuters on Sunday that it would be harder for countries to obtain sanctions waivers than in the previous Obama administration, when several countries, particularly in Asia, have received them.

OPEC agreed in June to strengthen supply to offset the expected disruption of Iranian exports.

An internal document considered by Reuters, however, suggests that OPEC is struggling to add barrels, as the increase in Saudi supply is offset by declines elsewhere.

Fatih Birol, executive director of the International Energy Agency (IEA), said Monday that other producers may have trouble compensating for the expected break-up in Iran and that oil prices could rise further.

US drillers added four oil platforms in the week to Oct. 19, bringing the total to 873, energy services firm Baker Hughes said Friday, bringing the number of rigs to its highest level since March. 2015. RIG-OL-USA-BHI

The number of US rigs is an early indicator of future production. With activity rising after months of stagnation, crude oil production in the United States is also expected to continue to rise.

Given the rise in US crude oil exports, the Intercontinental Exchange (ICE.N) announced that its new futures contract on futures at the Permian West Texas Intermediate in Houston, Texas, would begin trading on Monday.

(Graph: number of American oil rigs – tmsnrt.rs/2OGtHZe)

Besides the potential for increased oil supply, the ongoing Sino-US trade dispute should begin to weigh heavily on demand.

"The total impact of the US-China trade war will affect the markets in 2019 and could weigh heavily on oil demand next year, increasing the possibility of the market becoming redundant," Emirates Bank NBD said in a statement. note.

The Eastport broker said that "Chinese manufacturing was starting to slow down" and that "Trump's proposal to slap … tariffs on … additional Chinese products as of January 1st would be an additional drag on trade ".

K.Y. Lin, spokesman for Taiwan-based Formosa Petrochemical Corp., a major fuel refiner, said that "lower demand in Europe and the United States" already affected gasoline profit margins, because excess fuel is sent to Asia.

(Graph: gasoline refinery margin for Asia – tmsnrt.rs/2NXa1Lc)