London: Brent North Sea crude hit a six-month high above $75 per barrel Thursday on supply concerns that have been worsened by the United States tightening the screw on sanctions-hit Iran. Brent for delivery in June jumped to $75.42 per barrel, the highest level since late October.
Oil’s other main contract, WTI, reached a six-month peak at $66.16 per barrel. The US removal this week of waivers that allowed countries to buy from sanctions-hit Iran is expected to hit oil supplies, though analysts are keeping watch on the region and whether OPEC responds by opening up the taps. Crude futures have won support additionally on unrest in OPEC members Venezuela and Libya.
The US government’s decision not to extend the exemptions from the Iranian sanctions is still having after-effects,” analysts at Commerzbank said in a note to clients after Brent surpassed $75 per barrel. Oil kingpin Saudi Arabia meanwhile on Wednesday said it had no immediate plans to raise oil output to offset the move by Washington.
Markets tank on crude fears The key equity indices fell sharply on Thursday with the Brent, the global oil benchmark, crossing the $75 a barrel mark for the first time in 2019 and due to weak Chinese markets. Uncertainty due to the ongoing general elections and rising oil prices shot the ‘VIX’ up to 25.53 on Thursday. VIX or the ‘fear gauge’ – the measure of market’s expectation of volatility – was marginally below the three-year peak of 26.31, indicating poor investment sentiments.
India’s crude oil production falls
India produced 34,203 thousand metric tonnes (TMT) of crude oil during 2018-19 (April to March) which is 4.15 per cent below the output in the previous financial year and 7.59 pc lower than the target, the government said. The production in 2017-18 was 35,684 TMT while the target for 2018-19 was pegged at 37,011 TMT, a statement issued by the Ministry of Petroleum and Natural Gas said.
The downward trend in production comes at a time when the United States has said it will no longer grant sanctions waiver to countries like India which import crude oil from Iran from next month. At the same time, falling domestic crude oil production has pushed up India’s oil import dependence to nearly 84 pc of the total consumption.
