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Oil prices rise above $80 ahead of Iran sanctions

Oil prices rose on Monday ahead of Iran supply fears [Getty]

Date of publication: 22 October, 2018

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US sanctions targeting Iran's oil sector and central bank are scheduled to take effect on 4 November.
Oil prices rose above $80 per barrel on Monday as fears of tightening supplies mount ahead of US sanctions targeting Iran's oil sector take effect on 4 November.

Brent crude was trading at $80.26 a barrel on Monday morning, up 48 cents above their last close.

Iran is the third-largest producer of the oil cartel OPEC. The US has said it will seek to reduce Iran's exports to zero to force Tehran's hand to negotiate with the Trump administration.

US Treasury Secretary Steven Mnuchin also told Reuters on Sunday that Washington would not readily grant waivers for companies that do business with Iran. 

OPEC previously agreed to boost oil supplies, but experts say they are unable to make up for the expected drop in Iranian output. 

Saudi Arabia's oil minister Khalid al-Falih said Riyadh would rise oil output slightly to 11 million, shy of its 12 million barrel per day production capacity.

But he said Saudi Arabia could not guarantee that brent crude would not rise to above $100 per barrel, citing upcoming sanctions on Iran. 

US President Donald Trump has frequently called on Saudi Arabia to boost production to lower oil prices, which are believed to hope his GOP chances ahead of US midterm elections. 

Separately, on Sunday Saudi Arabia's oil minister said the kingdom had no plan to unleash a 1973-style oil embargo as international criticism over its killing of journalist and dissident Jamal Khashoggi widens.

US lawmakers have also floated the idea of imposing sanctions on Saudi Arabia while the kingdom pledged to retailiate with "bigger measures".

Experts say the threat of higher oil prices are a key tool of leverage Saudi Arabia has used to try to minimise criticism of the kingdom. 

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