It was previously reported that the export of crude from Iran had reduced in the first week of October. Now, it has emerged that riding on the back of this reduction, the costs of the Brent crude and the American crude have shot up.
Incidentally, the costs of the Brent and American crudes had come down, on Monday, 8th October. What added to the increase in the crudes' costs was the fact that oil companies engaging in production at the Gulf of Mexico had to stop their operations momentarily because of Hurricane Michael.
On Tuesday, the Brent crude cost had increased to around $84 per barrel after having dipped to about $83 per barrel. Likewise, the cost of the American crude had gone up to about $74 per barrel after having fallen to about $73 per barrel.
Noting about these fluctations, analyst Julius Baer noted, as quoted by the Reuters, "The oil market mood is exceptionally bullish, with fears growing that the U.S. demands for an Iran oil embargo could cause a significant supply shortfall."
Amid this volatility with respect to the cost of the crude, there is also the potentiality of Saudi Arabia wanting to cover up the shortfall of Iranian crude by upping its production which would go on to ease the supply tension.
By November, Saudi Arabia announced that it planned to increase the output to about 10.7 barrels per day (bpd). While the Iranian governmental authorities brushed aside the Saudi Arabian claim, market analysts and experts took a cautionary stance about it.
Analysts at JP Morgan observed, "Iranian barrels are declining fast, and Saudi Arabia’s promise to balance will face a reality check in a month’s time."