The prices of oil have risen past the $80 per barrel mark for the first time since July as the US crude inventories dropped, while impending sanctions against Iran. Hurricane Florence also created a perfect storm.
The price of Brent Crude oil increase to $80 per barrel. It is considered its highest price since the middle of July. It is already close to a three-year high.
The Energy Information Administration said that the inventories of US crude oil had declined by 5.3m barrels during the previous week. It said that it contributed to the price increase that was recorded this afternoon.
The threat of the sanctions that are looming over the oil sector of Iran and an impending hurricane that is forecasted to hit the east coast of the United States as early as tomorrow also contributed to the price hike.
However, Crude was greatly affected by the signs of the sanctions of President Donald Trump on Iranian oil as it may succeed in removing a large amount of the exports of Iran from the market once they are already imposed in November.
A partner working with Again Capital, John Kilduff, stated: “It looks like South Korea and Japan are going to zero purchases. That’s in line with the administration’s demands.”
“Both those countries stepped up to buy more U.S. crude oil.”
Hurricane Florence is a Category 4 hurricane. More than a million people, including businesses, have already started evacuating after a national weather warning.
Hurricane Florence is expected to be the most powerful storm to affect North and South Carolina in a period of nearly 30 years. It is not expected to affect the production, however, the evacuation of more than a million residents could result in a short-term spike in the demand.
In its monthly report, the Organisation of the Petroleum Exporting Countries reduced its forecast for the growth of oil demand for next year. It said that the challenges that are experienced in emerging countries could hinder the global economic growth.