Oil prices have soared on a reported fall in US crude stockpiles, and as expectations of tightening supply increased in the wake of impending US sanctions on Iran’s crude exports.

US West Texas Intermediate (WTI) crude futures CLc1 climbed 68 cents, or 1%, to stand at $69.93 a barrel, while Brent crude futures LCOc1 rose 30 cents, or 0.4%, to $79.36 after gaining 2.2% the previous day, Reuters reported.

Rivkin Securities investment analyst William O’Loughlin was quoted as saying: “Oil prices jumped overnight as American Petroleum Institute inventory data showed a large drawdown in inventories.”

The American Petroleum Institute (API) released data that indicated US crude stockpiles declined 8.6 million barrels last week to reach 395.9 million barrels.

Meanwhile, traders are wary of the impact of the sanctions against Iran that will be enforced from November this year.

“Several countries have already reduced crude imports from Iran due to pressure from Washington, DC.”

Several countries have already reduced crude imports from Iran due to pressure from Washington, DC.

As a result of the reduction in imports, analysts are expecting a tighter crude market.

ANZ bank said: “The looming supply risks in the Middle East, particularly US sanctions on Iran, should outweigh the concerns of oil demand growth slowdown from the emerging market crisis and China-US trade tensions.”

On 12 September 2018, Russian energy minister Alexander Novak warned of an uncertain and fragile market due to looming sanctions against Iran and other factors.

Novak said: “This is huge uncertainty on the market, how the countries, which buy almost two million barrels per day of Iranian oil will act. The situation should be closely watched, the right decisions should be taken.”

He also stressed on geopolitical risk and supply disruptions, including outages and falling production in Mexico and Venezuela.

If prices increase further, Novak indicated that Russia could raise its oil production.