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.


Apple warns China virus will cut iPhone production, sales

Updated 18 February 2020

Apple warns China virus will cut iPhone production, sales

  • Apple says demand for iPhones is also down in China because many of Apple’s 42 retail stores there are closed

CUPERTINO, California: Apple Inc. is warning investors that it won’t meet its second-quarter financial guidance because the viral outbreak in China has cut production of iPhones.
The Cupertino, California-based company said Monday that all of its iPhone manufacturing facilities are outside Hubei province, the epicenter of the outbreak, and all have been reopened. But the company said production is ramping up slowly.
“The health and well-being of every person who helps make these products possible is our paramount priority, and we are working in close consultation with our suppliers and public health experts as this ramp continues,” Apple said in a statement.
The death toll from COVID-19, a disease caused by the new coronavirus, was 1,770 as of Monday.
Apple says demand for iPhones is also down in China because many of Apple’s 42 retail stores there are closed or operating with reduced hours. China is Apple’s third largest retail market for iPhones, after the US and Europe.
Outside China, Apple said iPhone demand has been strong and is in line with the company’s expectations.
On Jan. 28, Apple said it expected second quarter revenue between $63 billion and $67 billion. Apple’s second quarter ends March 30.
Apple says the situation is evolving and it will provide more information on its next earnings call in April.