Crude oil price on Tuesday rose to over $78 per barrel as United States sanctions squeezed Iranian crude exports, tightening global supply despite efforts by Washington to get other producers to increase output.
While the global benchmark, Brent crude futures rose $1.13 to $78.50 a barrel, representing a 1.5 per cent gain, the United States West Texas Intermediate (WTI) crude gained $1.10, or 1.6 per cent, at $68.64 a barrel. Washington has told its allies to reduce imports of Iranian oil and several Asian buyers, including South Korea, Japan and India appear to be falling in line.
Trump had pulled the US out of an international accord under which Tehran had agreed to limit its nuclear development in exchange for sanctions relief.
Trump reintroduced sanctions and Washington later told countries they must stop buying Iran’s oil from November 4 or face financial consequences.
The US Ambassador to Germany had also called on Berlin to block an Iranian bid to withdraw large sums of cash from bank accounts in Germany.
The reduced imports of Iranian oil will reduce inventory in the global market and lead to a rise in prices, hence the push by US for other producing countries to increase supply to the market.
Reuters reported that the US government does not want to push up oil prices, which could depress economic activity or even trigger a slowdown in global growth. US Energy Secretary, Rick Perry, met Saudi’s Energy Minister, Khalid al-Falih, on Monday in Washington, as the President Donald Trump administration encourages big oil-producing countries to keep output high.
(ThisDay)
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