Azernews.Az

By Nigar Abbasova

The energy market, which has been torn between the rapid rebound in U.S. shale production and optimism surrounding the reduction deal for several weeks, received yet another affecting sign.

Oil prices edged up on February 3 on news that the Trump administration displayed readiness to impose fresh sanctions on multiple Iranian entities and prepared a new package of sanctions - a move, which is likely to escalate tensions between Washington and Tehran.

Brent crude futures increased some 21 cents, or 0.4 percent up to $56.77 a barrel, while West Texas Intermediate, climbed 28 cents, or 0.5 percent, to $53.82 per barrel, Reuters reported. The price of a barrel of Azeri Light crude oil increased $0.57 to stand at $58.04.

The new package is believed to be formulated in a way that would not violate the 2015 Iran nuclear deal, because they are solely focused on Iranian entities involved in the missile program or providing support to militant groups designated as terrorist entities by the U.S.

Earlier the United States put the Islamic Republic "on notice" for testing a ballistic missile, calling it a "provocative move", which undermines security, prosperity and stability of the region and violates a UN Security Council resolution.

Iran confirmed the launch of new missiles, but denied any breach as a result of the operations saying that the missile test is intended only for defensive purposes.

Deterioration of ties between the countries may negatively affect Iran’s energy ambitions and its desire to fully recover the sphere, by slowing the pace of investment flow. The country reportedly needs investment worth $200 billion, while some $130 billion would go to the upstream sector.

Comments by Russian Energy Minister Alexander Novak that oil producers had cut their output in accordance with a pact agreed in December also helped to support prices.

Novak said global oil output was cut by 1.4 million bpd last month as part of the deal. Besides, Novak said Russian companies may cut oil production quicker than had been initially agreed with OPEC and that he expected the market to rebalance by the middle of this year.

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Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova

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