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Oil prices jump to 3-year high amid Iran tensions

Oil prices jump to 3-year high amid Iran tensions

Mubasher: Oil prices rose on Thursday, reaching their highest level in three years on the back of ongoing protests and tensions in oil producer Iran.

West Texas Intermediate (WTI) or Nymex futures grew 0.32% to $61.83 per barrel (pb) by 12:31 GMT, their highest level since December 2014.

Meanwhile, Brent crude futures edged up 0.04% to $67.87 pb, their highest price since May 2015.

Iran has been hit by antigovernment protests, which began last week, as the sanctions lifted two years ago have not had the economic impact that was expected.

Moreover, foreign leaders including US President Donald Trump, have scrutinised the Iranian government for how it spent money on foreign conflicts, a point seen as another reason behind the protests.

“The market has taken a strong cue from the increased level of back-and-forth between Iran and the US in response to widespread pro-reform protests in the third-biggest OPEC crude producer over the last week,” consultancy JBC Energy said in a note.

“The potential reinstatement of US sanctions targeting the Iranian oil industry remains an issue,” the firm added.

The US is scheduled to conduct a review of temporary waivers on sanctions against Iran later in January.

The riots in Iran have left over 20 people dead, but fears have emerged that the oil producer, the third largest in the Organizaton of Petroleum Exporting Countries (OPEC), may see its output trimmed on the back of the protests.

Reducing oil production from Iran would bolster prices and trim global supply. So, far though, Iran’s oil exports have not been disrupted.

On the same line, major oil producer Venezuela is undergoing economic outlook woes after it failed to repay debt recently.

“The number one issue is the geopolitical situation…not only Iran, because we also have an escalating situation in Venezuela where they haven’t been able to pay their debt recently," said Torbjorn Kjus, oil analyst at Norway-based DNB Bank, has said.