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The price of oil is approaching $US82 per barrel as investors continue to pour into the commodity ahead of the fresh US sanctions against Iran, the world’s fifth largest oil producer.

Concerns about supply constraints likely to emerge once the new sanctions come into place in November are driving investors to buy into oil ahead of time, in turn pushing up prices.

Oil prices could rise to $US100 a barrel, NAB said yesterday. That’s good news for investors in ASX oil explorers, especially as activity in the sector hots up in the wake of the Carnarvon discovery off WA.

Brent crude oil, the international benchmark, hit a daily high of $US81.81 per barrel yesterday — a gain of more than 1%. before slipping a little after CNBC reported that Saudi Arabia has indicated it is “able and willing” to pump an additional 550,000 barrels per day to the market.

Here’s the long-term chart:

West Texas Intermediate (WTI), the US benchmark, was also seeing gains on Thursday, up 1.3 per cent to $US72.50 per barrel.

“Oil prices remain in the bulls domain amid concern that US sanctions on Iranian crude oil exports will result in much tighter physical market conditions once they take effect in November,” Stephen Innes, head of trading for Asia at OANDA, said.

“While the US oil inventory data counts, the fact that the markets could still be underestimating the supply crunch from Iran sanction has many Oil investors running with the bulls.”

Oil prices are set to increase further in the coming months. JPMorgan last week argued that Brent could spike as high as $US90 per barrel in the coming months.

“The main driver of this revision is a higher estimate of how much Iranian crude exports might decline due to multi-country respect for US sanctions that should come into effect on November 4th,” JPMorgan said in a note on September 21.

 

This article first appeared on Business Insider Australia, Australia’s most popular business news website. Read the original article. Follow Business Insider on Facebook or Twitter.