Michael Wittner, an analyst at Societe Generale, forecasts US sanctions will remove 400,000-500,000 BPD of Iranian crude from the global oil market, Reuters reported.
Greg McKenna, chief market strategist at futures brokerage AxiTrader, says it is still "far from certain" that sanctions "will bite in the way intended". American measures could cut the Persian Gulf nation's crude exports, and traders are watching whether OPEC and its allies will end their agreement to curb supply and increase production instead to fill in the gap.
"Coupled with no signs of new supply coming on, demand remaining strong as well as the geopolitical turmoil in Iran and you have the conditions for this push up towards $80" a barrel.
So far this year, China has lived up to these expectations.
"The rapidly growing US shale oil production is now helping to plug the supply gap to only a limited extent because pipeline bottlenecks are preventing some of the oil from reaching the refineries and export terminals on the US Gulf Coast", Commerzbank analysts said in a note. China's refinery runs rose almost 12 percent in April from a year earlier, to around 12.1 million barrels per day, marking the second-highest level on record on a daily basis, data showed. West Texas Intermediate was up 0.86% to $71.89 a barrel.
Chinese refineries processed 12.13 million bpd in March, beating the previous record of 12.03 million bpd from November 2017.
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Crude oil prices are now stable - both Brent and WTI are only slightly lower.
In total, South Korea's April crude oil imports were 11.59 million tonnes, or 2.83 million bpd, up 2.5 percent from 11.30 million tonnes from 2017, according to the data.
Some oil analysts have said they expect Iranian crude exports to fall by as little as 200,000 barrels per day (BPD), while others put the figure closer to 1 million bpd (MMBPD). After reaching a bottom in late February around $3 per barrel, the Brent-WTI spread reached $5.15 per barrel in April, which was the highest level for the spread since January. This is a sign that bulls are not trading with as much conviction as we saw following Trump's Iran decision.
It remains unclear how hard US sanctions will hit Iran's oil industry.
Oil price is now trending towards $80 per barrel following bullish trading that heightened yesterday in the worldwide market which saw the price leap to $78 yesterday, up from $67 April average.
OPEC and its partners chose to extend its production cuts till the end of 2018 in Vienna on November 30, as the oil cartel and its allies step up their attempt to end a three-year supply glut that has savaged crude prices and the global energy industry.