Investing.com - Oil prices climbed to multi-year highs on Thursday morning in Asia as markets adjusted to the prospects of renewed U.S. sanctions against major crude exporter Iran.
Crude Oil WTI Futures for June delivery were trading at $71.72 a barrel at 11:40PM ET (03:40 GMT), up 0.82%. Brent Oil Futures for July delivery, traded in London, were up 0.74% at $77.78 per barrel.
Shanghai Crude Oil WTI Futures for September delivery were up 4.15% at 474.70 yuan ($74.56) per barrel.
U.S. President Donald Trump on Tuesday pulled the U.S. out of an international nuclear deal reached in late 2015 which curbed Iran’s nuclear program in exchange for removing U.S.-Europe sanctions.
The move raised the risk of conflict in the Middle East and cast uncertainty over global oil supplies.
The U.S. plans to impose new sanctions against Iran, which produces around 4% of global oil supplies and is the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC).
Iran’s oil exports hit 2.6 million barrels per day (bpd) in April, with China and India buying more than half of Iran’s oil.
A limit of 1 million bpd for exports may be re-imposed on Iran, although it may take several rounds of reductions to reach target levels.
The near-term impact on the oil market would be limited due to a 180-day period as planned sanctions are implemented, but the impact will escalate by November. Oil prices are expected to spike, with the possibility of $90-100 per barrel prices.
In China, which is Iran’s single largest buyer of oil, Shanghai crude futures on Thursday posted their biggest intra-day rally since their launch in March, rising more than 4% to new highs.
Sanctions come amid an oil market that has already been tightening due to strong demand, especially in Asia, and as top exporter Saudi Arabia and top producer Russia have led efforts since 2017 to withhold oil supplies to prop up prices.