- Oil prices jump 1% as markets continue to prepare for the imposition of fresh sanctions on Iran by the US.
- Concerns about supply constraints likely to emerge once the new sanctions come into place in November are driving the oil price higher right now.
- Brent crude, the international benchmark, is at a high not seen since autumn 2014.
The price of oil is approaching $82 per barrel on Thursday as investors continue to pour into the commodity ahead of the imposition of fresh US sanctions against Iran, the world's fifth largest oil producer.
Concerns about supply constraints likely to emerge once the new sanctions come into place in November are driving investors to buy into oil ahead of time, in turn pushing up prices.
Brent crude oil, the international benchmark, hit a daily high of $81.81 per barrel, a gain of more than 1%, at around 9.30 a.m. BST (4.30 a.m. ET), before slipping a little after CNBC reported that Saudi Arabia has indicated it is "able and willing" to pump an additional 550,000 barrels per day to the market. By 11.30 a.m. BST (6.30 a.m. ET) it was trading at $81.39, a gain of around 0.75% from the open.
Here's the long-term chart:
West Texas Intermediate (WTI), the US benchmark, is also seeing gains on Thursday, up 1.3% to $72.50 per barrel in European morning trade.
"Oil prices remain in the bulls domain amid concern that US sanctions on Iranian crude oil exports will result in much tighter physical market conditions once they take effect in November," Stephen Innes, head of trading for Asia at OANDA, said in an email. "While the US oil inventory data counts, the fact that the markets could still be underestimating the supply crunch from Iran sanction has many Oil investors running with the bulls."
Oil prices are set to increase further in the coming months, with JPMorgan last week arguing that Brent could spike as high as $90 per barrel in the coming months.
"The main driver of this revision is a higher estimate of how much Iranian crude exports might decline due to multi-country respect for US sanctions that should come into effect on November 4th," JPMorgan said in a note on September 21.