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rude oil prices have risen to four-year highs, led mainly by concerns that the impact of United States’ sanctions on Iranian supply may be larger than expected, and a lack of clarity about exports by the Middle East supplier implies more volatility in the months ahead.

ICE Brent and NYMEX crude futures have gained around 20 percent since mid-August, with ICE Brent crude futures breaching the US$85 per barrel mark in early October.

S&P Global Platts Analytics in late September increased its forecast for cuts in Iranian oil exports from 1.4 million barrels per day (bpd) to 1.7 million bpd once the sanctions take effect on Nov. 5. Platts Analytics expects Iranian crude and condensate exports to fall to 1.1 million bpd in October, and to 800,000 bpd by the fourth quarter of 2019, down from 2.91 million bpd in April.

Total estimated export volumes on Aframaxes, Suezmaxes and very large crude carriers from Iranian ports sank by 11.5 percent to 1.7 million bpd in September from 1.92 million bpd in August, according to data from S&P Global Platts trade flow software cFlow. These are the lowest exports by Iran in at least two-and-a-half-years before the West lifted sanctions in January 2016 and show key customers are making significant cuts to their Iranian imports.

Japanese refiners have suspended crude loadings from Iran since September. Spain-based Cepsa, a buyer of Iran’s oil, has also stopped purchasing Iranian crude.

Further price upside might, however, be capped by rising Organization of Petroleum Exporting Countries (OPEC) and non-OPEC production.

In Moscow’s recent Energy Week conference Saudi Energy Minister Khalid al-Falih said Saudi Arabia is producing an average 10.7 million bpd, with November projected to come in “slightly higher”.

Falih described the country’s spare capacity as “sufficient” at around 1.3 million bpd.

Russia reported record output of 11.356 million bpd in September, but can boost production by another 200,000-300,000 bpd “within several months”, Russian Minister of Energy Alexander Novak said.  

 S&P Global Platts’ latest OPEC survey confirmed higher production by the group. According to the survey, OPEC’s 15 countries boosted crude output in September to 33.07 million bpd, 180,000 bpd above August. That is the most OPEC has pumped since July 2017, if Congo, which joined the organization in June, is not included.

The survey indicated OPEC and its 10 non-OPEC partners, led by Russia, have surpassed their aim stated at their meeting in June of raising production by a combined 1 million bpd from May levels.

OPEC’s September output was 850,000 bpd above where it was in May, not including Congo, according to Platts survey data, while Russia’s production in September is up 390,000 bpd from May.

But a lack of clarity on Iran’s real export volumes as Iranian tankers switch off their transponders is likely to keep the market on tenterhooks.

Around a dozen Iranian oil tankers have turned off their transponders in recent weeks, making it tricky to track the country’s crude export, according to Platts cFlow. Recent tanker data had shown a sharp fall in exports to India, but the reappearance of the tankers suggested flows to India may not be as low as preliminary data showed.

Meanwhile, as prices creep higher, the blame game has begun.

US President Donald Trump in late September accused the OPEC nations of “ripping off” the world on oil prices in a speech before the United Nations.

 Saudi Arabia and Russia stressed that they are boosting oil production to record levels in response to global demand, not geopolitics or pressure from the US administration.  
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