Oil prices reach two-year high amid Iran unrest
Oil prices reach two-year high amid Iran unrest
Oil prices have reached their highest levels since a slump in 2015, due to civil unrest in Iran sparking an uptake in buying and an Russia-OPEC agreement to curb production.
2 min read
Although Iranian oil production remains unaffected, the unrest has contributed to the price spike [Getty]
Oil prices reached their highest levels since 2015 on Tuesday, amid ongoing protests in Iran fuelling buying, in addition to outages in Libya and the North Sea, as well as OPEC and Russia continuing to curb oil production.
Brent Oil prices have since softened, but many are hopeful for a steady increase in prices in the new year.
The civil unrest in Iran, OPEC's third-biggest oil producer, has resulted in Arab separatist militants blowing up an oil pipeline in Khuzestan province, south west Iran.
Despite this having little real effect on Iran's oilfields, growing speculation about the country's oil production due to the continued unrest is sparking an uptake in buying.
"Geopolitical risks are clearly back on the crude oil agenda after having been absent almost entirely since the oil market ran into a surplus in the second half of 2014," Bjarne Schieldrop at Nordic Bank SEB told Reuters.
"Geopolitical risks started to impact the oil price again last autumn as production cuts then had drawn inventories significantly lower."
Further turbulence in oil-producing countries has stoked the recent price rises. In Libya, a crude oil pipeline was blown up in a suspected militant attack last week, slashing the state oil firm's production rates by up to 100,000 barrels per day.
Oil prices have also been on the increase in recent weeks due to an OPEC and Russia-led agreement to curb production rates in order to tighten the market.
The countries have agreed to continue this deal into 2018, aiming to revive the oil market after a three-year long slump.
Prices have been steadying since Tuesday after outages in Libya, as well as the North Sea, were fixed.
On Wednesday morning, Brent Crude Oil, the international benchmark for oil prices, was at $66.55 a barrel, compared to Tuesday's high of $67.29.
Brent Oil prices have since softened, but many are hopeful for a steady increase in prices in the new year.
The civil unrest in Iran, OPEC's third-biggest oil producer, has resulted in Arab separatist militants blowing up an oil pipeline in Khuzestan province, south west Iran.
Despite this having little real effect on Iran's oilfields, growing speculation about the country's oil production due to the continued unrest is sparking an uptake in buying.
"Geopolitical risks are clearly back on the crude oil agenda after having been absent almost entirely since the oil market ran into a surplus in the second half of 2014," Bjarne Schieldrop at Nordic Bank SEB told Reuters.
"Geopolitical risks started to impact the oil price again last autumn as production cuts then had drawn inventories significantly lower."
Further turbulence in oil-producing countries has stoked the recent price rises. In Libya, a crude oil pipeline was blown up in a suspected militant attack last week, slashing the state oil firm's production rates by up to 100,000 barrels per day.
Oil prices have also been on the increase in recent weeks due to an OPEC and Russia-led agreement to curb production rates in order to tighten the market.
The countries have agreed to continue this deal into 2018, aiming to revive the oil market after a three-year long slump.
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Mohammed bin Salman's anti-corruption purge and ongoing |
Prices have been steadying since Tuesday after outages in Libya, as well as the North Sea, were fixed.
On Wednesday morning, Brent Crude Oil, the international benchmark for oil prices, was at $66.55 a barrel, compared to Tuesday's high of $67.29.
Recent events in Saudi Arabia have also caused speculation about oil market unrest. Since Crown Prince Mohammed bin Salman's anti-corruption purge in November where many high-ranking officials and businessmen were detained, as well as a bubbling tension with Iran due to its alleged support of Houthi rebels in Yemen, fears over OPEC's largest oil producer's oil output have gained momentum and contributed to the uptake in buying.
In addition, Mohammed bin Salman has been spearheading the nation's "Vision 2030" campaign to readapt the national economy away from its heavy reliance on oil.
Agencies contributed to this report.
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