The price of oil has officially approached its highest level for the past four years, surpassing the level of $80 per barrel. The significant price increase is due to the limited supply coming from Iran as a result from the United States’ restoring sanctions upon them. Furthermore, the fact that other OPEC member states have not upped their production to compensate for the gap left by Iran is also pushing prices upwards.
The Brent crude today reached $81.45 per barrel (it was at $81.48 yesterday), while the WTI traded at $72.27.
It is important to point out that the sanctions against Iran haven’t even started yet: they officially come into effect on November 4. However, the markets are reacting to the preparations for those sanctions. The United States are also still fighting other countries, notably the EU, trying to convince them to stop importing oil from Iran. Nevertheless, these states were against the dissolution of the Iran nuclear deal and have still not confirmed what their approach would be.
The next OPEC meeting will take place in December, well after the sanctions kick in, and only then we can expect a decision on whether OPEC will make up for the loss in supply and decrease prices.
