THE crude price has risen to a high for the year following the US decision to tighten sanctions on Iran in a development which could encourage firms to invest in the North Sea.
Brent crude rose to $74.70 per barrel yesterday after the US said on Monday that all countries must stop importing oil from Iran on May 2.
The Trump administration has decided not to renew waivers from curbs on imports that were granted to eight countries including China, Japan and Turkey.
The move to increase pressure on Iran is expected to support the crude price amid concerns about the potential for disruption to supplies from other important oil-producing countries that are facing challenges.
“Amid seasonally higher oil demand into the summer, the oil market is likely to be very sensitive to any further disruptions in Libya, Venezuela or Nigeria,” said Giovanni Staunovo at UBS.The investment bank expects Brent to trade in the $70/bbl to $80/bbl range this quarter.
The result of the sanctions move will be studied with interest in the North Sea, as the industry in the area emerges from the deep downturn triggered by the crude price plunge from 2014 to early 2016.
Brent rose to a four year high of $85/bbl in October following moves by major exporters led by Saudi to curb production to support the market. However, the price fell below $55/bbl in December amid booming production in the US shale fields.
The oil price may remain volatile as countries look to protect their own interests.
Bjarne Schieldrop, chief commodities analyst at Nordic banking group SEB, noted that China has strongly opposed the US sanctions on Iran and could even increase imports from the country.
He said Russia had made clear that It was not keen to hold the oil price much above $65/bbl for fear of boosting shale oil investments and production.
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