US hard line on Iran raises risks of oil price spike

collected by :Frank Ithan

The last time Iran was sanctioned, about half its current oil exports of some 2.4 million barrels were removed from the market. Morgan Stanley, for instance, now expects Iranian production to drop to 2.7 million barrels a day by the fourth quarter, with more than 1 million barrels taken off line. Some analysts say while a price spike is possible, the oil market is pricing in a fair amount of skepticism despite its recent run up. "If there's a real abandonment of Iranian oil," prices for Brent could reach $110 to $115, said John Kilduff of Again Capital. They expect Iran's production to reach 2.5 million barrels a day in mid 2019 from the current 3.8 million barrels a day.

Iran is threatening to close the world's most important transit lane for crude oil

Rising tensions between the United States and Iran are resurrecting long-held fears that the Iranian military will attempt to disrupt much of the world's crude oil shipments by shutting the Strait of Hormuz. President Donald Trump's decision to abandon the 2015 Iran nuclear deal and restore sanctions on the Iranian economy have stoked geopolitical risk and fueled an oil price rally. The administration escalated the situation last week when the State Department revealed it is pushing oil buyers to cut off all Iranian crude imports by Nov. 4, sooner than many anticipated. Now, Iran is suggesting that if the United States succeeds in sidelining its exports, it will use its position along the Strait of Hormuz to stop other Middle Eastern countries from shipping their barrels to the world.

Crude oil: Asia's oil refiners rush to deal with US-China trade war, looming Iran sanctions

as mentioned in International Brent crude oil futures fell 27 cents, or 0.4 per cent, to $77.12 per barrel by 0124 GMT from their last close. Meanwhile, Washington's new sanctions against Tehran are due to kick in from November.That double whammy is prompting Asian refiners to move swiftly, with South Korea leading the way. Under pressure from Washington, Seoul has halted all orders of Iranian oil, according to sources, even as it braces from spillover effects from the US-China tit-for-tat on trade. "We will switch to either Middle East or West African supplies," he said.JTD Energy's Driscoll said China may even replace American oil with crude from Iran. The Petroleum Association of Japan previously warned refiners will have to stop loading Iranian crude oil from October if Tokyo doesn't win an exemption on US-Iran sanctions.Amid the turmoil, some in the region spot opportunity.