Oil soars to three-and-a-half-year high

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The agreement envisages a step-by-step lifting of anti-Iranian economic sanctions in exchange for Tehran curbing its nuclear program and allowing inspections to ensure that the nature of this program is purely peaceful.

"Given the uncertainty over trade, Iranian sanctions and various other geopolitical hot spots, people are making a bet that U.S. growth will outperform the rest of the world and that these companies will be less affected", he said.

Payment terms do not pose a problem as settlement of Chinese transactions with Iran are limited to telegraphic transfer (TT), cash or euro credit, although some restrictions were introduced in 2017 on the use of letters of credits (LCs) on Iranian transactions.

In some cases, to go around the sanctions, some Iranian cargoes had to be re-routed to the UAE before heading to China, resulting in higher shipping cost, she said.

The rise in oil prices means further accretion to the nation's Excess Crude Account, into which the difference between the market price of crude oil and the budget benchmark is saved to provide a cushion when oil prices fall or extra cash is needed for spending on infrastructure.

"We are in a new world. At the same time China has also taken up the opportunity to further enhance its relationship with this major oil producer, extending valuable discussions with Iran's Foreign minister as it looks to find ways around the re-establishment of USA sanctions".

The IEA on Wednesday warned that demand is at risk of being eroded in the second half of this year thanks to the price rally that's been orchestrated by Saudi Arabia and allied oil producing nations including Russian Federation.

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He added the market is becoming convinced Trump will be able to disrupt crude exports after his administration placed sanctions on the head of Iran's central bank earlier this week. This is a key step, given that a considerable volume of crude oil from Iran has typically been destined for Europe, while at the same time Iran heavily depends on supplies and access to financing from European companies.

Reuters reported that oil prices held firm as ongoing production cuts by OPEC and looming U.S. sanctions against Iran tightened the market amid strong demand.

Opec and other producers such as Russian Federation have restrained supplies in support of higher prices.

Exports hit a new one-week record, the EIA said.

U.S. West Texas Intermediate crude futures were at $71.63 a barrel, up 14 cents and set for a third straight week of increase.

The upward pressure intensified following the US' decision to withdraw from the Iran deal. Brent crude is edging towards $80 per barrel as United States stockpiles fall and amid worries of potential oil supply disruptions from Venezuela and Iran.

Fuel prices continue as well with rise that began at end of March and is now intensified by political tensions that have led to skyrocketing oil price.