LONDON: Oil prices rose by nearly 1 percent on Thursday, driven by the prospect of a shortfall in global supply once US sanctions against major crude exporter Iran come into force in just five weeks’ time.
US President Donald Trump this week demanded that OPEC raise production to prevent further price rises ahead of key congressional elections in early November.
Analysts said OPEC and partner Russia appear unlikely at this point to respond immediately to Trump’s demands, while US energy secretary Rick Perry has also ruled out using US strategic crude reserves as a means of lowering the price.
The most-active December Brent crude futures contract was up 47 cents at $81.26 a barrel by midday in London, just off Tuesday’s four-year high of $82.55.
The front-month November contract expires on Friday.
US futures were up 66 cents at $72.23 a barrel.
“On paper, you could argue that the technical and fundamental perspective points to higher prices, so I think that will carry on into next week and further out,” Saxo Bank senior manager Ole Hansen said.
“$100 dollars barrel, I am struggling to see that. Already at $80, we are seeing emerging-market local oil prices pretty close to where we peaked a few years ago ... the race to protect consumers from further price rises from here could potentially impact demand growth sooner than would otherwise have been expected.”
Estimates of how much Iranian crude could disappear from the market once US sanctions come into force on Nov. 4 vary widely among the analyst community, from anywhere from 500,000 barrels per day (bpd) all the way to 2 million bpd.
At its 2018 peak in May, Iran exported 2.71 million bpd of crude oil, equivalent to nearly 3 percent of daily global consumption.
“We view that crude market risks are heavily skewed to the upside and whilst we are not explicitly forecasting Brent to rise to $100 per barrel, we see material risks of this coming to fruition,” Japanese bank Mitsubishi UFJ Financial Group said in a note to clients.
OPEC has little spare capacity to make up for any drop in exports from Iran, which is the group’s third-largest producer.
US crude production hit a record 11.1 million bpd in the week ending Sept. 21, according to data from the Energy Information Administration (EIA) on Wednesday.
That is an increase of almost a third since mid-2016.
Commercial crude stocks rose by 1.85 million barrels, to 395.99 million barrels, the EIA data showed.
Oil jumps ahead of shortfall in Iran supply
Oil jumps ahead of shortfall in Iran supply
- US sanctions against Iran to start Nov. 4
- Analysts say $100 oil is possible as markets tighten
IsDB announces $2.41bn in new financing for strategic development sectors
JEDDAH: The Islamic Development Bank has approved $2.41 billion in new financing for a series of transformative projects during its 364th Executive Board meeting, chaired by IsDB President Mohammed Al-Jasser.
The approvals underscore the bank’s ongoing commitment to regional cooperation, economic development, and climate- and environment-friendly investments that advance the UN Sustainable Development Goals across its member countries.
The new financing includes an additional $40 million for the Central Asia–South Asia Electricity Transmission and Trade Project (CASA-1000) in Tajikistan, aimed at boosting regional energy trade, improving electricity access and reliability, and mitigating climate change through the export of clean and renewable energy.
The bank also approved €116 million ($135 million) to upgrade Senegal’s Dakar Expressway Project.
The initiative is designed to improve health, education, and economic services for local populations, reduce traffic congestion and peak travel times, and enhance road safety measures to halve traffic-related deaths and injuries, with a particular focus on women and young pedestrians.
A $1.307 billion allocation was approved for Kazakhstan’s Economic and Industrial Zones Project to foster sustainable industrial development.
The initiative is expected to promote economic diversification, attract investment, create jobs, and boost global competitiveness through infrastructure upgrades and operational efficiency in special economic zones, industrial zones, and specialized industrial zones.
Bahrain will receive $330.07 million to expand its industrial capacity and strengthen economic competitiveness. The funding will support the development of modern industrial land with resilient infrastructure, advanced export-oriented manufacturing, effective internal connectivity, and reclaimed land facilities.
The project aims to stimulate private investment, generate employment, and reinforce Bahrain’s position as a regional industrial and logistics hub.
The IsDB approved $160 million to enhance utilities, water, and urban development sectors in Jordan.
The financing will secure future drinking water supply for Aqaba, Amman, and northern regions, support climate adaptation and mitigation, foster economic growth, and promote private sector participation in sustainable, long-term water solutions to alleviate severe water stress.
Azerbaijan was granted $436.67 million to improve agricultural productivity by reducing irrigation water losses and supporting sustainable rural development, in line with Azerbaijan’s 2030 vision.
The project will also promote green growth, strengthen climate resilience, and ensure long-term food security.
The approved projects reflect the IsDB’s strategic focus on fostering sustainable and inclusive growth across member countries by addressing critical infrastructure, energy, water, transport, and industrial development challenges.
These initiatives are expected to deliver lasting impact and contribute effectively to achieving the Sustainable Development Goals.
