Like a much-needed breather: oil prices have gone down sharply from its four-year high level this Thursday due to a market-wide selloff resulting to the recent news citing Saudi Arabia and Russia's prospect to increase crude production.
Oil futures rose at an extremely high level never seen since November of 2014 following Washington's imminent sanctions on Iran's crude supply to the world market.
According to the report from Reuters, Brent crude LCOc1 futures has gone down USD$1.71, or close to 2 percent, settling at a USD$84.58 per barrel. In comparison, Wednesday's Brent oil futures spiked up to USD$86.74, the highest ever since.
Meanwhile, the US West Texas Intermediate (WTI) crude CLc1 futures followed suit, dropping USD$2.08, or 2.72 percent decrease, to settle at USD$74.33 a barrel.
The Upcoming Nov. 4 Iran Oil Sanction
As previously reported on Business Insider, the Trump administration has imposed economic sanctions on the Islamic Republic which would arrive in two waves. The first one took effect earlier in August, prohibiting the embattled nation from using the US dollars for its transactions in the world market.
The follow-up wave, which is set to take effect this November, will ultimately cut-off Iran's supply from the global crude market.
Iran happens to be the third largest OPEC (Organization of the Petroleum Exporting Countries) supplier and with its absence, the global supply for oil will severely be affected.
Saudi Energy Minister Khalid al-Falih told Reuters that oil prices have risen as a direct result of this decision from Washington. The market is apparently bracing for the effects of the sanctions on Iran.
The replacement of sanction followed after Washington received intelligence reports suggesting that Tehran has violated the terms of the 2015 Nuclear Agreement delimiting the country from further developing its nuke weapons in exchange for the lifting of economic restrictions.
The Kingdom, which is the top figure in the 15-member oil cartel, had previously made it clear that the group has no plans to raise their output, as demanded by America's Donald Trump. Saudi's Aramco has a maximum output of 12 million barrels per day.
However, the tide has seemed to change when Saudi Arabia and its non-member ally, Russia, announced its prospect to increase its production of the black gold, a report said.
It remains to be seen how this will further play out in the coming weeks as more other OPEC nations are expected chip in to replace the slack left by Iran's exit.
