Oil prices boom to highest levels in more than 3 years

  • Oil prices jumped to multi-year highs on Wednesday.
  • That’s after President Donald Trump announced plans to leave the Iran nuclear deal.
  • Follow oil in real time here.

Oil prices rallied to multi-year highs on Wednesday, a day after President Donald Trump announced plans to withdraw the US from the Iran nuclear deal.

West Texas Intermediate rose 2.8% to $US71.17 a barrel, the highest level since November 2014, around 7:30 a.m. ET. Brent, the international benchmark, also hit a three-year high, up 2.8% to $US77.20 a barrel.

In his announcement, Trump that the US will reimpose the “highest level of economic sanctions” on Tehran, which could put hundreds of thousands of crude barrels at risk.Under the sanctions, firms have a 90- to 180- day wind-down period to cut ties with Iran.

Iran is the third-largest OPEC producer and makes up about 5% of the global oil supply. After the US tightened economic penalties on Iran in 2012, oil prices jumped as much as 15%, and production in the country fell by about one million barrels per day.

But the impact may be less “severe” this time around, according to Capital Economics analyst Thomas Pugh.

“The re-imposition of US sanctions on Iran is unlikely to have a major impact on global oil supply,” Pugh said. “For now, we expect the impact on supply to be relatively small and so are sticking with our end-2018 forecast of $US65 per barrel, down from about $US77 today.”

Iranian President Hassan Rouhani said Tehran will remain in the deal with remaining members – China, France, the United Kingdom, Russia and Germany – at least for now.

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