As U.S. crude inventories fell and traders braced for the impact of renewed sanctions on Iran, oil rose to $80 a barrel in London on Wednesday for the first time since 2014, Bloomberg reports.
The rising crude oil prices have been influenced by President Donald Trump’s decision to leave the Iran nuclear deal and reimpose sanctions against the Middle Eastern nation, elevating concerns that Trump’s decision will strain global supplies as markets are already tightening.
Thanks to strong demand and output cuts by OPEC producers, the excess of supply that has burdened oil prices for three years is gone, the International Energy Agency said yesterday.
The $80 price tag brings oil to the level that Saudi Arabia reportedly wants to cover the cost of heavy domestic spending commitments, though the prices are high enough to deter customers from buying, warns the IEA, which advises oil-consuming nations.
Supply concerns are “top of mind” since the U.S. left the Iran nuclear deal, says Norbert Ruecker, head of macro and commodity research at Julius Baer Group Ltd. in Zurich.
“The geopolitical noise and escalation fears are here to stay,” Ruecker says.
