Singapore:  Oil prices clocked up more multi-year highs as traders adjusted to the prospects of renewed U.S. sanctions against major crude exporter Iran amid an already tightening market.

The United States plans to impose new sanctions against Iran, which produces around 4 percent of global oil supplies, after abandoning an agreement reached in late 2015 which limited Tehran’s nuclear ambitions in exchange for removing U.S.-Europe sanctions.

Oil prices rose sharply in response to the announced measures. Brent crude futures, the international benchmark for oil prices, hit their strongest since November 2014, at $77.89 per barrel. U.S. West Texas Intermediate (WTI) crude futures also marked a November-2014 high, at $71.84 a barrel, before edging back to $71.78 per barrel. That was-still 0.9 percent above their last settlement.

In China, which is Iran’s single biggest buyer of oil, Shanghai crude futures posted their biggest intra-day rally since their launch in March, rising more than 4.5 percent to a dollar-denominated record above $75 per barrel.

The threat of new sanctions comes amid an oil market that has already been tightening due to strong demand, especially in Asia, and as top exporter, Saudi Arabia and No.1 producer Russia have led efforts since 2017 to withhold oil supplies to prop up prices.

 

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