The US removal of waivers that allowed countries to buy from sanctions-hit Iran is expected to hit oil supplies (Rodger BOSCH)

London (AFP) – Brent North Sea crude hit a six-month high above $75 per barrel Thursday on supply concerns that have been worsened by the United States tightening the screw on sanctions-hit Iran.

Brent for delivery in June jumped to $75.42 per barrel, the highest level since late October. 

Oil’s other main contract, WTI, reached a six-month peak at $66.16 per barrel.

The US removal this week of waivers that allowed countries to buy from sanctions-hit Iran is expected to hit oil supplies, though analysts are keeping watch on the region and whether OPEC responds by opening up the taps.

Oil prices had already enjoyed a strong recovery this year, with output capped by Russia and the Organization of Petroleum Exporting Countries. 

Crude futures have won support additionally on unrest in OPEC members Venezuela and Libya.

“The US government’s decision not to extend the exemptions from the Iranian sanctions… is still having after-effects,” analysts at Commerzbank said in a note to clients after Brent surpassed $75 per barrel. 

Oil kingpin Saudi Arabia meanwhile on Wednesday said it had no immediate plans to raise oil output to offset the move by Washington.

Saudi energy minister Khalid al-Falih insisted that global oil inventories continued to rise despite unrest in Venezuela and the tougher US action.

Iran’s supreme leader Ayatollah Ali Khamenei on Wednesday called the end of oil sanction waivers by the United States a “hostile measure” that “won’t be left without a response”.

“US efforts to boycott the sale of Iran’s oil won’t get them anywhere. We will export our oil as much as we need and we intend,” his official English-language Twitter account said, quoting from a speech he delivered to workers in Tehran.

The United States on Monday said it would halt the practice of exempting countries including India, China and Turkey from sanctions on purchases of Iranian oil. 

In May last year, US President Donald Trump withdrew Washington from the 2015 Iran nuclear deal with world powers, which had given the Islamic republic sanctions relief in exchange for curbs on its nuclear programme.

Washington reimposed oil sanctions on Iran in November, but initially handed eight countries, including several US allies, six-month reprieves.

Five of the countries — Greece, Italy, Japan, South Korea and Taiwan — have already heavily reduced their purchases from Iran.

Around 0900 GMT, Brent North Sea crude traded at $75.23 per barrel, up 66 cents from Wednesday’s close.

WTI gained 21 cents at $66.10 per barrel.

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Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.