Published: Sat, May 12, 2018
People | By Neil Grant

Oil touches 3½-year high after U.S. quits Iran deal

Oil touches 3½-year high after U.S. quits Iran deal

Jubeir said: 'These missiles are Iranian manufactured and delivered to the Huthis.

Oil prices have risen after President Trump pulled the U.S. out of the worldwide nuclear deal with Iran and reignited tensions in the Middle East. Brent crude rose to $77.56 a barrel last night, its highest level since November 2014, on expectations of disruption to oil supplies from Iran, before easing back as investors booked profits.

U.S. bank Goldman Sachs said renewed sanctions and risks to supplies elsewhere, especially in Venezuela, meant there was a high possibility of higher prices than the bank's summer Brent price forecast of $82.50 per barrel.

Global benchmark Brent crude climbed as high as $77.97 per barrel on Thursday, while American benchmark crude reached as much as $71.88 a barrel.

Iran's Petroleum Minister Bijan Namdar Zangeneh has said that the U.S. exit from the 2015 Iran nuclear deal will not affect the oil industry, state TV reported on Friday.

Saudi Arabia said it would work with other producers to lessen the impact of any shortage in oil supplies. That would hurt not just Iran's economy but also the dollar's liquidity, as the global oil trade undergirds the greenback, said Edward Al-Hussainy, senior analyst, global rates and currency at Columbia Threadneedle in Minneapolis.

Crude oil prices are showing a climb in the aftermath of President Trump's announcement on the Iran nuclear deal.

But it's not clear how high prices will go. That's about 1 million barrels a day more than in early 2016. While he said several of the rockets were intercepted and there were no casualties, the Israeli media called the confrontation as the biggest direct military clash between the two rivals.

Prices of crude oil and gasoline already had been steadily rising.

Weekly US crude oil production hit another record last week, climbing to 10.7 million barrels per day (bpd). The extra demand is helping to wipe out an oil glut that has plagued markets.

"Distillate and gasoline stockpiles have been shrinking in America, suggesting that fuel demand is healthy, which will ultimately lead to a draw in overall crude inventories", Ahn Yea Ha, a commodities analyst at Kiwoom Securities Co., said by phone from Seoul.

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