Trump withdrew the United States from the 2015 nuclear deal between Iran and world powers in May, and his administration imposed a round of sanctions on the Islamic republic in August.
Iranian Minister of Petroleum has welcomed OPECs decision effectively rebuffing President Donald Trump's calls for a hike in oil output, saying United States empty dream to zero Irans oil exports would not realize.
Crude oil prices touched new four-year highs yesterday as Brent crude - the global benchmark for crude oil - touched $82.20 a barrel.
"We're on the verge of some significant volatility in Q4 2018 because depending on the severity and duration of the Iranian sanctions, the market simply does not have an adequate supply response for a 2 million barrel a day disappearance of oil from the markets", Jaeggi said. "We defend many of these nations for nothing and then they take advantage of us by giving us high oil prices", stressing, "it 's not good". Eventually, I do believe that the market will be used to that price and we will be able to go higher, but we may be a little bit overextended over the last couple of days. This hike might take place for the first time since the year 2014 as the market braces for the loss of Iranian supplies because of the US penalty.
US B-52s fly over South and East China Seas
The move comes at at a tense time - China and the U.S. now are embroiled in a trade war, and U.S. President Donald Trump accused China Wednesday of trying to meddle in U.S. elections.
Indian refiners will either have to significantly reduce or completely stop importing crude oil from Iran over the next month, increasing their dependence on other Middle Eastern suppliers like Saudi Arabia and Iraq, Moody's Investors Service said Thursday. OPEC, along with other suppliers except for Russian Federation, began to limit their output in order to raise crude values.
"Iran will lose sizeable export volumes, and given Opec+ reluctance to raise output, the market is ill-equipped to fill the supply gap", Harry Tchilinguirian, global head of commodity markets strategy at French bank BNP Paribas, told the Reuters Global Oil Forum. "It's good for peace and it's good for the shape of the global price of oil".
In a speech before the United Nations, Mr Trump reiterated calls on the Organization of the Petroleum Exporting Countries to pump more oil and stop raising prices.
Analysts expect crude oil prices to stay under pressure on the back of a deadlock on supply between the top producers and the world's largest economy.