Brent crude oil has surpassed the level of $72 per barrel, rapidly rising by 2.4 dollars from the start of trading on Monday. Black gold added more than 3% and set a new annual maximum at $74.28. Now the price movement has concentrated in the $73.6-74.1 channel, it is most likely that quotes will be consolidating in this area in the nearest future.
On Friday, April 19th, the oilfield services company Baker Hughes reported a decrease in the number of existing drilling rigs in the U.S. by 8 units last week, to 825. However, this was not the reason for the surge of bull activity on the market.
The reason was the rumors, confirmed by sources of Reuters and The Washington Post, about a complete ban on Iranian oil import. It became known that President Trump is going to exert "maximum economic pressure" on Iran.
On May 2, 2019, the delay on sanctions levied against eight states that purchase Iranian oil will end. This half-year delay was announced by U.S. authorities while introducing sanctions against Iran in November 2018. Importers include China, India, Italy, Greece, Japan, South Korea, and Taiwan. Some of them have already reduced the import of Iranian oil to zero, but these are not the main oil consumers.
Cancellation of exemptions will hit Asian buyers the hardest. The largest consumers of Iranian oil are China and India, which were willing to extend the current agreement. Chinese oil companies reported that the news took them by surprise, but they can compensate the deficit using alternative supplies from Russia, the United States or Saudi Arabia. It seems the redistribution of the oil market continues to be dynamic.