Oil prices rose on Tuesday as more evidence emerged that crude exports from Iran, OPEC’s third-largest producer, are declining in the run-up to the re-imposition of U.S. sanctions and as a hurricane moved across the Gulf of Mexico.
Brent crude was up 45 cents, or 0.5 percent, at $84.36 a barrel by 0629 GMT, having fallen as low as $82.66 in the previous session before largely recovering. Brent hit a four-year high of $86.74 last week.
U.S. West Texas Intermediate (WTI) crude futures rose 41 cents, or 0.5 percent, to $74.70 a barrel.
Iran’s crude exports fell further in the first week of October, according to tanker data and an industry source, as buyers are seeking alternatives ahead of the start of the U.S. sanctions on Nov. 4 and creating a challenge to other OPEC oil producers as they seek to cover the shortfall.
The Islamic Republic exported 1.1 million barrels per day (bpd) of crude in that seven-day period, Refinitiv Eikon data showed. An industry source who also tracks exports said October shipments were so far below 1 million bpd.
That is down from at least 2.5 million bpd in April, before President Donald Trump in May withdrew the United States from a 2015 nuclear deal with Iran and re-imposed sanctions. The figure also marks a further fall from 1.6 million bpd in September.
Last week, Saudi Arabia, the biggest producer among the Organization of the Petroleum Exporting Countries (OPEC), announced plans to lift crude output next month to 10.7 million bpd, a record.
“Iranian barrels are declining fast, and Saudi Arabia’s promise to balance will face a reality check in a month’s time,” JP Morgan said in a note.
Iran’s Oil Minister Bijan Zanganeh on Monday called a Saudi claim that the kingdom could replace Iran’s crude exports “nonsense.”
“Iran’s oil cannot be replaced by Saudi Arabia nor any other country,” Zanganeh said, according to his ministry’s website.
Oil companies operating in the Gulf of Mexico shut down 19 percent of oil production as Hurricane Michael moved toward eastern Gulf states including Florida.
Forecasters predicted the storm would become a Category 3 hurricane with sustained winds of 111 to 129 miles per hour (178 to 208 km per hour) and bring heavy seas to producing areas.
If current forecasts prove accurate, the hurricane would largely miss major producing assets in the Gulf, analysts said, but any change of track could widen the impact.
The International Monetary Fund on Tuesday cut its global economic growth forecasts for 2018 and 2019, saying that trade policy tensions and rising import tariffs were taking a toll on commerce while emerging markets struggle with tighter financial conditions and capital outflows.
