Oil prices rise as U.S. sanctions on Iran begins

Oil prices rose on Monday as U.S. sanctions against Iran’s fuel exports began but were softened by waivers allowing major buyers to import Iranian crude for a while.

Tehran said that it would defy Washington and continue to sell.

Brent crude oil was at $72.83 a barrel by 1230 GMT while U.S. light crude was 15 cents lower at $62.99.

At 2.00 a.m. commodities, U.S. crude was $62.91 per barrel and Brent was last at $72.62.

At 3.00 a.m. U.S. crude was $62.68/barrel while Brent was last at $72.41.

“Oil bulls have long pinned their hopes on the Iran factor and today’s dearth of upside potential will be a major source of concern,’’ Stephen Brennock, an analyst at brokerage PVM Oil, said.

Washington imposed sanctions against Iran on Monday, restoring measures lifted under a 2015 nuclear deal negotiated by the administration of former U.S. President Barack Obama.

In response, Iranian President Hassan Rouhani said, in a speech broadcast on state Media that Iran would break the sanctions and continue to sell oil.

And Washington said on Friday it will temporarily allow eight importers to keep buying Iranian oil.

“U.S. sanctions against Iran … created serious concerns with traders earlier in September.

“But they are turning into a damp squib,’’ said Fiona Cincotta, market analyst at City Index.

South Korea said on Monday it had been granted a waiver, at least temporarily, to import condensate, a super-light form of crude oil, from Iran.

It was also allowed to continue financial transactions with the Middle East country, it said.

China’s foreign ministry expressed regret at the U.S. decision but would not directly say if China had or had not been granted an exemption.

Oil markets have been anticipating the sanctions for months and the world’s biggest producers have been increasing output.

A joint output from Russia, the United States and Saudi Arabia rose above 33 million barrels per day (bpd) for the first time in October, up 10 million bpd since 2010, with all three pumping at or near record volumes.

In the Middle East, the Abu Dhabi National Oil Co plans to increase its oil production capacity to four million bpd by the end of 2020 and to five million bpd by 2030, it said on Sunday, from an output of just over three million bpd. (Reuters/NAN)