The Brent oil futures crossed $80 on Wednesday, sending price near to the four-year highs. Besides the Iran induced supply shock, traders are expecting upward pressure as Hurricane Florence and other tropical storms approaches the US shores.
The crude market was getting ready to accommodate a price bang as leading producer Iran is forced out of the market. Iran supply was the leading factor that had driven prices downwards in the last few years.
The effect of the US sanctions on Iran is expected to be reflected from early November onwards. Still, even before the Iran exit, prices reaching the bull zone is shocking oil importers.
As of now, there is uncertainty about supply conditions and the extent of the price rise.
“We think oil market fundamentals are increasingly supportive of crude prices, at least at current levels,” -Reuters quoted HSBC’s Gordon Gray.
“While we aren’t explicitly forecasting Brent to rise to $100 a barrel, we see real risks of this happening.” Added Gray.
Several OPEC and non-OPEC members are anticipating healthy returns once Iran is pushed out.
A leading gainer will be the US as its export to other regions increased in the last few quarters. Market analysts anticipate that the US may become the largest producer by 2019. The US, Saudi Arabia and Russia are competing to fill the supply to be left by Iran.