Iran sanctions send oil prices, supply concerns higher

Experts said the sanctions could potentially remove up to 1.2 million barrels of oil per day

Secretary of State Mike Pompeo speaks during a news conference on Monday, April 22, 2019, at the Department of State in Washington. (AP Photo/Sait Serkan Gurbuz)

The Trump administration’s decision to impose sanctions on countries that buy Iranian oil is raising concerns about global crude supply and sending oil prices to their highest levels since October.

Industry experts said Monday that the sanctions could potentially remove up to 1.2 million barrels of oil per day from international markets. But that number will likely be lower, depending on how countries respond and just how much oil Iran continues to export.

READ MORE: Oil and gas sector applauds new Alberta premier’s many pro-business pledges

President Donald Trump wants to eliminate all of Iran’s revenue from oil exports, money he says funds destabilizing activity in the Middle East and elsewhere.

The announcement primarily impacts Iranian oil importers including China, India, Japan, South Korea and Turkey.

“It’s difficult to imagine all exports being cut off, especially since China is still a major buyer of Iranian crude oil,” said Jim Burkhard, vice-president for oil markets at IHS Markit. “How China responds will go a long way to shape just how much Iranian exports are cut or not.”

To make up for the Iranian losses, Saudi Arabia may increase production that the country had recently trimmed, but it “is going to use up all the spare capacity that they have, or pretty darn close to it, and that is going to leave markets feeling tight,” said Shin Kim, head of supply and production analytics at S&P Global Platts.

Oil prices rose more than 2% Monday, helping to lift some energy stocks.

The price of gasoline in the U.S. was already rising and the development could raise prices further.

“We’ve seen that market tighten up considerably even before the Iranian news, and we’re also seeing a number of refining issues in the U.S.,” said Ryan Fitzmaurice, energy strategist at Rabobank.

Rising oil — and gasoline — prices can squeeze consumers, whose spending accounts for about 70% of U.S. economic output. “They can take a bite out of consumers’ purchasing power,” said Scott Hoyt, senior director at Moody’s Analytics, where he follows consumer economics.

But unless energy prices surge considerably higher, a lot faster, Hoyt said he doesn’t expect them to do much damage to the American economy. Employers are hiring, and the unemployment rate is near a five-decade low of 3.8%.

Rising prices are “coming at a time when consumers are relatively well positioned to handle it,” he said. “Job growth is strong. Wage growth is healthy.” And prices at the pump aren’t even up much over the past year: The AAA reports that U.S. gasoline prices average $2.84 a gallon, compared to $2.76 a gallon a year ago.

___

Paul Wiseman in Washington, D.C. contributed to this report.

Cathy Bussewitz, The Associated Press

Like us on Facebook and follow us on Twitter

Just Posted

Ponoka UFA celebrates grand opening

New farm and ranch supply store is larger, has new features

Four Maskwacis residents charged with 38 crimes Nov. 9

Maskwacis RCMP: four arrested following armed robbery, pursuit and home invasion

Ponoka Broncs fall to Wetaskiwin in final home match

Five graduating players honoured, recognized for their contributions

Almost Midnight Madness almost upon us

It’s the most magical night of the year — if you like… Continue reading

‘Pick a lane:’ Alberta premier fires back at Bloc Quebecois leader

Alberta Premier Jason Kenney reacts to comments by Bloc Quebecois Leader Yves-Francois Blanchet

Jagmeet Singh says he’ll vote against throne speech if NDP requests not met

Singh is to meet with Prime Minister Justin Trudeau on Thursday

PHOTOS: Ponoka Legion’s Remembrance Day ceremony

Guest speaker Ron Labrie recounts moving story of fallen Ponoka airman

Small group of Cherry fans protest his firing at Rogers HQ

One sign at the Toronto rally: ‘Rogers cancels Don, we cancel Rogers’

Ideas for Alberta independence would increase costs, Nenshi says

Province has formed panel to examine how to get what a ‘fairer deal’ from Confederation

UPDATED: Alexandra Lewis has been located

UPDATED: Alexandra Lewis has been located, safe and well. ORIGINAL STORY: Ponoka… Continue reading

Alberta harvest a ‘growing crisis’: MP Blaine Calkins

Alberta Conservative MP’s resolve to assist farmers struggling with harvest

Petition to ‘bring back Don Cherry’ goes viral after immigrant poppy rant

Cherry was fired from his co-hosting role for the Coach’s Corner segment on Nov. 11.

‘We love you, Alex!’: Trebek gets choked up by ‘Jeopardy!’ contestant’s answer

The emotional moment came in Monday’s episode when Trebek read Dhruv Gaur’s final answer

Most Read