Market intelligence: China-Iran petrochemicals trade insulated from United States sanctions

Oil hits highest since Nov 2014 as Brent edges closer to $80

Brent crude price reached $80 per barrel today, which is the highest point since November 2014, and is a result of geopolitical tension after President Donald Trump's decision to pull the USA out of the Iran nuclear deal.

London's Brent crude touched USD80 a barrel for the first time since 2014.

"If sanctions are only US-driven, euro trade could continue without hindrance", said an oil sector expert. The French company won't risk investing in Iran following the return of US sanctions unless it can obtain a waiver.

Oil rose to $80 a barrel in London for the first time since 2014 as US crude inventories fell and traders braced for the impact of renewed sanctions on OPEC member Iran.

Global oil supplies could be hit by the decision by the United States to pull out of the Iran nuclear deal, and also by falling production in crisis-hit Venezuela, the IEA said on Wednesday.

France's Total warned on Wednesday that it might abandon a multibillion dollar gas project in Iran if it could not secure a waiver from United States sanctions, casting further doubt on European-led efforts to salvage the nuclear deal.

"Global inventories are approaching long-run averages, suggesting that the coordinated OPEC/non-OPEC supply cuts have been successful", said Jack Allardyce, oil and gas research analyst at Cantor Fitzgerald.

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"Though Iran is unlikely to give back all the production gains charted since the [Joint Comprehensive Plan of Action] nuclear deal removed sanctions in 2016, they are likely to see steady declines ahead, joining Venezuela in the ranks of OPEC members suffering from involuntary production losses", said Fraser.

In addition, the IEA has cut its oil consumption forecasts as higher prices work to reduce future demand.

Some analysts said sanctions could wipe 1 million barrels per day of Iranian crude off the market, while others said the impact would be limited to fewer than 500,000 barrels a day.

"The restoration of sanctions on Iran, which exports 2.5 million barrels of oil a day and is the world's fifth-largest exporter, may have implications for the market balance", the IEA said. It allowed India to make a portion of oil payments to Tehran in rupees through state-run UCO Bank that has no U.S. exposure that could lead it to fall foul of any new sanctions.

The price of WTI crude, meanwhile, hit $72.10 per barrel.

Crude oil prices turned lower in early Wednesday trading after the International Energy Agency said the market was creating economic headwinds. "We are in a world where geopolitics are dominating the market again", Patrick Pouyanne said.

USA crude oil production has soared by more than a quarter in the last two years, to a record 10.72 million barrels per day.

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