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US Sanctions Could Push Oil Prices Beyond $90

US Sanctions Could Push Oil Prices Beyond $90US Sanctions Could Push Oil Prices Beyond $90

US sanctions on Iranian crude could soon push oil prices above $90 a barrel, an oil analyst told CNBC on Monday, amid heightened energy market fears of a supply shock.

“As we go more toward the fourth quarter … that is when we really see the risk of prices going well into the 80s and potentially even into the 90s but very critical is how much Iranian production we lose,” Amrita Sen, chief oil analyst at Energy Aspects, an independent research consultancy specializing in global energy markets, told CNBC’s “Squawk Box Europe” on Monday.

"A lot of people think China can just buy all of the Iranian oil but they came out and said: 'Yes, we may not reduce but we are not going to increase our intake either.' So, you could see a significant crunch in terms of lost supplies into the market and then that obviously means higher prices," she added.

Investors are seen weighing bullish factors that include potential supply disruptions to Iranian crude exports against more bearish indicators, such as a ramp-up in production by OPEC and its allied partners.

Alongside Russia, OPEC kingpin Saudi Arabia and other members of the Middle East-dominated oil group agreed in late June to begin increasing production by up to 1 million barrels per day starting in August.

The decision has helped put a lid on a price rally, with crude futures falling more than 7% since climbing above $80 a barrel in May.

The last time Iran was sanctioned, about half its current oil exports of some 2.4 million barrels were removed from the market.

However, this time around, many energy analysts believe sanctions will remove far less, maybe around half the prior amount, but some onlookers have recently raised their expectations amid signs some companies are complying with tough talk from the White House.

Morgan Stanley, for instance, now expects Iranian production to drop to 2.7 million barrels a day by the fourth quarter, with more than 1 million barrels taken offline.

Energy Aspects' Sen said that even predictions of Iran's crude production falling by much as 1.5 million barrels a day could prove to be "conservative" by the yearend.

 

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