Rising Oil Prices; Uncertain Market Future Affected by Iran Sanctions

On Friday, as the market contracted ahead of a new wave of U.S. sanctions against Iran's oil industry set to take effect mid-next month, global oil prices stabilized below their highest levels in four years. According to Reuters, at 12:30 GMT, Brent crude oil prices fell by five cents to $84.53. On Thursday, Brent crude oil prices decreased by $1.34, or about 1.6%, but it is expected that prices will rise by about 2% over the week. Light U.S. crude oil prices increased by 25 cents to $74.58, which is about 1.5% higher than the previous Friday. Dorbert Rucker, an energy market expert at Julius Baer, stated, 'The market atmosphere is extremely turbulent, and concerns about reduced oil supply due to U.S. sanctions on Iranian oil exports are increasing.' On Thursday, oil prices slightly decreased due to increased U.S. oil production and commitments from Saudi Arabia and Russia to raise their production to compensate for reduced Iranian exports in the global market. Iran has protested against the 'private' oil agreement between Russia and Saudi Arabia. However, these factors have not significantly impacted the 15 to 20 percent increase in oil prices since early August, and oil prices have now reached their highest levels since 2014. Reuters adds that the U.S. government has pressured all governments and international companies to stop purchasing Iranian oil starting mid-next month to exert pressure on Iran to negotiate a new nuclear deal. Many experts believe that Iran's oil exports will decrease to about one million barrels per day. American bank Jefferies predicts that 'Iran's oil exports in November may fall below one million barrels per day. Currently, it seems that only China and Turkey are willing to take the risk of U.S. sanctions for trading with Iran.' This American investment bank added that there is enough oil to meet market demand, but 'stockpiles have decreased to the lowest level ever recorded.' It is estimated that traders and hoarders have stockpiled about 1.2 billion barrels of oil in anticipation of rising prices. However, American bank Goldman Sachs predicts that the trend of rising oil prices may stop. In a report to its clients, the bank stated, 'Although the likelihood of rising oil prices will continue for now, we believe that the fundamental data outside of Iran is not concerning. With new production capacities joining the oil market in early 2019, we will see a slight surplus in production.'