Brent oil rises to 4-year high ahead of Iran sanctions, traders eye more hikes

Approximately 1.5 million barrels per day of Iranian oil will effectively be out of the market on November 4 once the US sanctions kick in. (AFP)
Updated 01 October 2018

Brent oil rises to 4-year high ahead of Iran sanctions, traders eye more hikes

  • Brent was pushed up by looming sanctions against Iran, which will start targeting its oil sector from November 4
  • With oil prices soaring, there are concerns over their inflationary effect on demand growth

SINGAPORE: Brent crude oil prices rose to their highest since November 2014 on Monday ahead of US sanctions against Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), that kick in next month.
Benchmark Brent crude oil futures rose to as much as $83.27 a barrel and were at $83.21 at 0339 GMT, up 48 cents, or 0.6 percent from their last close.
US West Texas Intermediate (WTI) crude futures were up 32 cents, or 0.4 percent, at $73.57 a barrel.
WTI prices were supported by a report on Friday of a stagnant rig count in the United States, which points to a slowdown in US crude production, which now rivals top producers Russia and Saudi Arabia.
Brent was pushed up by looming sanctions against Iran, which will start targeting its oil sector from November 4.
ANZ bank said on Monday that “the market is eyeing oil prices at $100 per barrel.”
In a sign that the financial market is positioning itself for further price rises, hedge funds increased their bullish wagers on US crude in the week to Sept. 25, data from the US Commodity Futures Trading Commission (CFTC) showed on Friday, increasing futures and options positions in New York and London by 3,728 contracts to 346,566 during the period.
In a further sign of the impact that the US sanctions on Iran will have on the market, China’s Sinopec said it is halving loadings of Iranian crude oil this month. China is the biggest buyer of Iranian oil.
“If Chinese refiners do comply with US sanctions more fully than expected, then the market balance is likely to tighten even more aggressively,” Edward Bell, commodity analyst at Emirates NBD bank wrote in a note published on Sunday.
“We’re going to find out very soon as approximately 1.5 million barrels (per day) of Iranian oil is effectively going offline on Nov. 4. If the market senses that Saudi Arabia capacity is tapped out at 10.5 million bpd ... oil prices will rocket higher with the flashy $100 per barrel price tag indeed a reasonable sounding target,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore..
With oil prices soaring, there are concerns over their inflationary effect on demand growth, especially in Asia’s emerging markets where weakening currencies are further adding to high fuel import costs.
Add the trade disputes between the US and other major powers, especially China, and economic growth into 2019 could be eroded.
Growth in China’s manufacturing sector already sputtered in September as both external and domestic demand weakened, two surveys showed on Sunday.
In Japan, business confidence among big manufacturers declined in the last quarter its lowest in nearly a year, as firms felt the pinch from rising raw material costs and as global trade conditions worsened.


Emirates Skycargo deploys capacity to supply food, medicines in UAE

Updated 34 min 37 sec ago

Emirates Skycargo deploys capacity to supply food, medicines in UAE

  • The UAE imports 90 percent of its food
  • The cargo organization said it transported between mid-January and mid-March more than 225,000 tons of cargo

DUBAI: Emirates Skycargo said on Wednesday that it deploys capacity to supply and replenish food and medicines in the UAE, as rulers role out strategies to sustain the country amid the coronavirus pandemic, Reuters news agency reported.

The national cargo organization said it transported between mid-January and mid-March more than 225,000 tons of cargo in total out of which 55,000 tons were food items including fruits, vegetables, meat and seafood, and more than 13,000 tons were pharmaceutical. 

Since the UAE imports 90 percent of its food, food security is a top priority. The annual food security costs of the country is $3.53 billion annually.

Earlier this week the UAE announced a strategic food security law that ensures adequate and uninterrupted food supplies through wholesalers and retailers across the UAE at all times, Khaleej Times reported. 

The law seeks to regulate the strategic stock of food commodities in the country in the event of crises, emergencies and disasters and offers incentives and facilities to registered providers and merchants.