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Oil prices hit record high

Crude oil pipeline
Crude oil pipeline [File photo]

Oil prices hit a three-and-a-half-year high yesterday supported by tight supply as well as renewed US sanctions against Iran that are likely to disrupt crude oil exports from one of the Middle East’s major producers.

Saudi Arabia slips into destruction - Cartoon [Sabaaneh/MiddleEastMonitor]

Saudi Arabia slips into destruction – Cartoon [Sabaaneh/MiddleEastMonitor]

Brent crude hit $79.02 a barrel, a 79 cent increase, registering its highest level since November 2014.

US crude rose 40 cents to $71.36 a barrel, also near its highest level since November 2014.

World oil prices have risen more than 70 per cent over the past year because of the sharp increase in demand as well as production cuts by the Organisation of the Petroleum Exporting Countries (OPEC) led by Saudi Arabia with other major producers, including Russia.

The United States has announced it will impose sanctions on Iran over its nuclear programme, which increased fears that markets will face shortages later this year when trade restrictions enter into force.

OPINION: Oil price rise poses challenge for sanctions policy

“Saudi Arabia and the rest of OPEC members’ commitment to production cuts as well as the possibility of lower imports from Iran due to new sanctions, is a key factor in supporting the price at the moment,” Reuters quoted William O’Loughlin, an investment analyst at Rivkin Securities, as saying.

Yesterday’s data showed that refinery operating rates in China, the world’s largest oil importer, rose 12 per cent in April, in comparing with a year earlier, to 12.06 million barrels per day, which is the second-highest level recorded on a daily basis.

The tight supply of oil in the markets has terminated the accumulation of global supplies that have cut prices between the end of 2014 and the beginning of 2017.

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