Crude Oil Price Hits $80, Highest Since 2014, on Iran Concerns . As Shell declares Force Majeure on exports of 195,000bpd Bonny Light crude

Crude oil prices climbed above $80 per barrel on Thursday for the first time since November 2014, on concerns that Iranian exports could fall because of renewed United States sanctions, which will reduce supply in an already tightening market.

This is coming as Shell Petroleum Development Company (SPDC) yesterday suspended shipments of Nigerian Bonny Light crude to the international market, and declared a force majeure.

The crude oil market has continued to push higher as geopolitical concerns drove trading, with the global benchmark, Brent crude futures reaching an intraday high of $80.33 per barrel yesterday before receding to $80.16 per barrel.

United States West Texas Intermediate (WTI) crude futures also hit their highest since November 2014, at $72.30 per barrel.

US President, Donald Trump’s decision this month to withdraw from an international nuclear deal with Iran and revive sanctions that could limit crude exports from OPEC’s third-largest producer has boosted oil prices.

 France’s Total had warned on Wednesday that it might abandon a multibillion-dollar gas project in Iran if it could not secure a waiver from US sanctions, casting further doubt on European-led efforts to salvage the nuclear deal.

Reuters reported that a rapid decline in Venezuela’s crude production has further roiled markets in recent months.

Also global inventories of crude oil and refined products dropped sharply in recent months owing to robust demand and OPEC-led production cuts.

Oil stocks were expected to drop further as the peak summer driving season nears, offsetting increases in US shale output, according to reports.

In a related development, the shipments of Nigerian Bonny Light crude were suspended yesterday, after an outage prompted Shell to declare force majeure.

The force majeure, which took immediate effect, followed the shutdown of the Nembe Creek Trunk Line had prompted the force majeure.

Though Shell did not disclose the volume of crude oil affected by the force majeure, exports of Bonny Light are expected to run at around 195,000 barrels per day in June.

The Nembe Creek Trunkline, operated by Aiteo E & P, and the Trans Niger Pipeline (TNP) are the two major pipelines used by Shell and other producing companies operating in the eastern Niger Delta to pump crude oil to the Bonny export terminal in Rivers State.

An official of Aiteo, who spoke off record, told THISDAY yesterday that the company noticed a drop in the pressure, which prompted the shutdown.

“We are suspecting sabotage but it is too early to conclude as investigation is still ongoing,” he added.

In the western Niger Delta, the Trans-Forcados pipeline (TFP), operated by Heritage Oil, has remained shutdown after a leak was found on the facility on May 7.

Trans-Forcados pipeline is the major trunk line in the Forcados Pipeline System with export capacity of 400,000 barrels per day and second largest network in the Niger Delta after the Bonny pipeline system in the eastern Niger Delta.

International oil companies (IOCs) and Nigerian independent companies operating in the western Niger Delta lose 250,000 barrels per day to the closure of the TFP.

However, Shell has not declared force majeure on exports of Forcados grade of crude oil.