Brent crude fell below $80 per barrel on Thursday following a report by the Energy Information Administration (EIA) that US crude oil stockpiles were up by 6.5mn barrels last week to reach 416.4mn barrels– far higher than expectations.Â
Brent crude currently sits at $79.42 per barrel (as of writing), down from its four-year peak of $86 per barrel, which it hit in early October after a bull run amid speculation on US sanctions against Iran. Since then, the IEA and OPEC have lowered oil demand growth forecasts for this year and 2019.
Analysts have forecast prices as low as $60 and as high as $100 by the end of the year, but it would be difficult to tell with any certainty before US sanctions against Iran come into effect at the start of November.
US sanctions on Iran could remove up to 2mn bpd of oil ouput from the market, but if the cut is closer to the 1mn mark (closer to earlier loss estimates), the effect on global supply would be felt differently. Additionally, the US could grant waivers allowing some trade to continue with Iran.
In a conversation with Ole Hansen, the head of commodity strategy at Saxo Bank, he emphasized that the bull run was influenced by fear and speculation–market movements rather than supply issues.
For more on the oil price, check our website and tune in to our podcast on Sunday featuring the full interview with Ole Hansen.
