#MarketWatch – Oil prices climb as potential for further conflict with Iran grows

Commentary, Crude oil, News

‘Iran’s violation of the [nuclear] agreement could now prompt Europe to impose sanctions on Iran too’: Commerzbank


Oil futures climbed Monday as tensions with Iran, and the possibility of disruptions to oil flow in the Middle East, increased.

The move followed oil’s first weekly loss in three last week on the back of persistent worries about energy demand.

Geopolitical tensions with Iran have heated up, while oil demand expectations seem to be coming down, said Phil Flynn, senior market analyst at Price Futures Group.

August West Texas Intermediate crude CLQ19, +0.90% was up 68 cents, or 1.2%, to $58.19 a barrel on the New York Mercantile Exchange. The contract lost 1.6% for last week, according to Dow Jones Market data.

International benchmark September Brent BRNU19, +0.72% added 82 cents, or 1.3%, to $65.05 a barrel on ICE Futures Europe. Brent declined 0.8% for last week.

Iran is claiming that it is enriching uranium above the levels agreed to in the Iran nuclear deal, said Flynn, in daily commentary. “They are also threatening retaliation for the U.K. taking an Iranian oil tanker [last week]. They have threatened to seize U.K. ships and turn the Persian Gulf into a sea of blood.”

Iran’s Foreign Ministry spokesman Abbas Mousavi called the seizure of the Iranian supertanker “piracy,” but stopped short of suggesting Iran take actions against ships transiting through the Strait of Hormuz, the Associated Press reported Monday. The Strait is the world’s most sensitive oil-transportation choke point.

“Iran’s violation of the [nuclear] agreement could now prompt Europe to impose sanctions on Iran, too. For example, the EU could impose an oil embargo on Iran, as it did between 2012 and 2015,” said Carsten Fritsch, energy analyst with Commerzbank. “This would have no direct impact on Iranian oil exports as Europeans have in any case not bought any Iranian oil since the end of 2018 because of the U.S. sanctions; this is presumably one reason for Iran’s dissatisfaction and for the aforementioned ultimatum.”

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