Economy

Iran There Is No Spare Oil Capacity

Iran There Is No Spare Oil Capacity

Brent rose above $80/Bbl Wednesday for the first time since May, spurred by expectations USA sanctions against Iran's oil exports, which will start in early November, will tighten global markets.

"There is no spare capacity anywhere", he added.

Russia, for its part, who for all intent and purposes rescued a Saudi-led OPEC in early 2016 by agreeing to cut production to drive up global oil prices that had driven the kingdom into the red, forcing it to secure funds by issuing worldwide bonds and by unpopular austerity measures, is also warning that oil markets remain "fragile" due to geopolitics and production declines in key regions.

Iran, a founding member of the cartel, had been against the move which came as the country faces renewed United States sanctions after Washington's decision to leave the 2015 nuclear deal between Tehran and world powers.

Washington re-imposed some of the financial sanctions from August 6, while those affecting Iran's petroleum sector will come into force from November 4.

Oil prices broke the $80 a barrel barrier yesterday as the storm, along with Donald Trump's sanctions on Iran, bumped prices.

The U.S. agency said its data on Russian production comes mainly from the Russian Ministry of Oil but also oil companies and industry publications.

Under the deal, Iran undertook to put limits on its nuclear program in exchange for the removal of nuclear-related sanctions.

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However, prices were able to rebound into the close on Friday after a report said Secretary of State Michael Pompeo was going to give a press conference on new sanctions on Iran.

"Buyers can pay in kind, trade in other currencies, or extend credit - even keep the money in an escrow account in Switzerland and wait until these sanctions are over".

Following crippling sanctions on Iran following the collapse of the Washington and Tehran's nuclear deal, the price of a barrel of United States crude oil could result in a price rise of $4 (£3.12) a gallon of unleaded fuel at petrol station pumps. According to the IEA, global oil supply grew by a record 100 million barrels per day (bpd) in August.

Cutbacks from Iran's production following the imposition of USA sanctions did not provide an immediate enough catalyst for to support prices, he said.

"It increases the odds that there will be less oil coming out of there", said Phil Flynn, an analyst at Price Futures Group.

The US is prepared to take the "strongest action" against countries and entities who are found not complying with the Trump administration's sanctions on Iran, including reducing to zero the purchase of crude oil from the country, a senior official has told lawmakers.

Iran's exports so far this month slumped to around 1.3 million barrels a day.


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