Brent crude prices climbed past $80 a barrel Thursday, as Washingtons decision to reinstate sanctions on Iran continued to fuel a rally that has pushed the market to 3陆-year highs.
, the global oil benchmark, was up 0.8% , or 74 cents, at $80.02 a barrel on Londons ICE Futures exchange, revisiting an earlier move past $80, its highest level since November 2014. On the New York Mercantile Exchange, West Texas Intermediate futures
were up 66 cents, or 0.9%, at $72.14 a barrel.
Thursdays gains came as European companies pull back from Iran. European companies had said they would stand by the 2015 international nuclear agreement that saw sanctions against Iran eased in return for Tehran curbing its nuclear program. Washington dropped out of that pact last week, sending oil sharply higher on the belief that Iranian supply will be curbed, when crude inventories are already falling.
If European companies pull out of investments, Iran will question the point of sticking by the agreement, said Amrita Sen, analyst at consultancy Energy Aspects.
Theres a minimum of 400,000 barrels per day of Iranian exports at risk, Sen added.
The U.S. has said it is possible there will be secondary sanctions imposed on European companies who continue to deal with Iran.
French energy major Total SA
said Wednesday that it would withdraw from a major gas project in Iran before November if it wasnt granted a waiver by the U.S. Total had signed a $1 billion deal to develop Irans South Pars field.
The London P&I Club, which advises shippers on insurance, published a noteWednesdayrecommending its members seek guidance from the U.S. Treasury before entering into Iran-related deals.
Any barrels lost from Iran will exacerbate an already tight market, analysts said.
I think theres more upside at the moment than downside, the new range is $72-$85, said Michael Hewson, chief market analyst at CMC Markets, adding that he wouldnt rule out $90 brent this year.
Read: Heres why U.S. oil is trading at its biggest discount to the global crude benchmark since 2015
However, higher prices could weaken demand, which in turn could cap the market, Hewson warned.
Brent prices have climbed almost 20% in 2018, boosted by output cuts from major producers and increased tensions in the Middle East.
Opinion: Two ways to play oil stocks while limiting your risk
Global oil stocks in the Organization for Economic Cooperation and Development countries hit their lowest level in three years in March, the International Energy Agency said Wednesday.
The current market deficit points to a further decline in stocks, Commerzbank said in a daily note.
Investors were also monitoring the economic crisis in Venezuela which has seen a steep fall in the countrys oil production, adding to supply concerns.
Nymex reformulated gasoline blendstock
the benchmark gasoline contract- rose 0.6% to $2.26 a gallon. ICE gas oil changed hands at $699.25 a metric ton, up $14.75 from the previous settlement.
June heating oil
rose 0.9% to $2.290 a gallon.
Read: U.S. gasoline prices could top $3 this summer thanks to Iran and Venezuela
June natural gas
slipped 0.1% to $2.811 per British thermal units.
Barbara Kollmeyer contributed to this report Sarah McFarlane
Related Topics Futures Commodities Markets Commodity Futures Trading Commission Oil
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