Commodities: Brent tops $80 per barrel for the first time since 2014

WTI Crude Oil

WTI Crude Oil

Brent crude price reached $80 per barrel today, which is the highest point since November 2014, and is a result of geopolitical tension after President Donald Trump's decision to pull the U.S. out of the Iran nuclear deal.

Moves in the commodities space were muted on Thursday, despite the news headlines around oil after Brent crude futures topped the $80 per barrel mark for the first time since 2014.

Overall, the global benchmark has surged by 70pc in less than a year.

Chief Executive Officer of Total Patrick Pouyanne has predicted that the price of a barrel of crude will hit $100 later this year.

Helped by strong demand, especially in Asia, as well as a USA announcement earlier this month to renew sanctions against OPEC-member Iran, Brent has climbed 20 percent since the start of the year.

U.S. West Texas Intermediate (WTI) crude futures were up 64 cents at $72.13 a barrel, also their highest since November 2014. Global oil supplies could be hit by President Donald Trump's decision to pull the United States out of the Iran nuclear deal, and also by falling production in crisis-hit Venezuela, the International Energy Agency said yesterday.

"Supply concerns are top of mind after the United States left the Iran nuclear deal", said Norbert Rücker, of Julius Baer.

Brent Crude
Daily July Brent Crude

Further supporting prices, Royal Dutch Shell (RDSa.L) on Thursday said it was halting crude exports from a major Nigerian pipeline.

The Bank of England noted last week that oil prices were up by 13 per cent this month compared to February and that this would push up petrol and diesel prices, lifting inflation over coming months.

The Paris-based IEA said potential supply disruptions in Iran and Venezuela have prompted oil traders to focus on geopolitics rather than fundamentals, warning that any supply cuts could cause prices to rocket.

The bottleneck in North America likely contributed to a 4.9 million barrel rise in US crude oil inventories, to 435.6 million barrels, that the private American Petroleum Institute reported on Tuesday.

The IEA, which represents some of the world's largest consumer countries, also said it too would be "ready to act if necessary to ensure that markets remain well supplied". For those who haven't been following the oil market, the price of crude has been steadily rising since the summer due to several geopolitical issues.

But experts fear the U.S. might stop Iranian banks' access to the global transaction network SWIFT thereby curbing all transactions in foreign currencies.

Leading production increases is the USA, where crude output has soared by 27% in the last two years, to a record 10.72-million barrels a day, putting the U.S. within reach of top producer Russia's 11-million barrels a day.

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