Oct. 1 (UPI) -- Crude oil prices reached levels not seen in four years Monday, with Brent prices topping $85 a barrel and WTI soaring to $75.
Oil prices surged today as President Donald Trump announced a new $1.2 trillion tri-lateral trade deal with Canada and Mexico.
If it had gone the other way, a trade dispute between the North American countries could have pushed prices down, analysts said.
"The stock market is loving it," said John Kilduff, founding partner at energy hedge fund Again Capital. "It unleashes more economic activity. It should enable Mexico to buy some crude oil off of us."
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U.S. sanctions on Iranian crude oil that go into effect next month have investors worried that crude oil could top $100 a barrel. John Driscoll, chief strategist at JTD Energy Securities, said Oman oil prices spiked to $90 a barrel, a barometer for where Brent prices could go.
"It almost signaled a psychological panic-type buying," Driscoll said. "We're moving into a world where you have lower inventories, lower spare capacity, less protection for buyers and this kind of sent a shot across the bow."
The sanctions could take an estimated 1.5 million barrels per day of Iranian oil out of the world markets. China, India, Japan and South Korea have indicated that they will cut purchases of Iranian oil. Sinopec already cut its imports in half. China was initially hesitant to get involved but has faced pressure from the Trump administration.
Russia will not be able to increase crude oil exports to Asia but it could funnel more barrels to Europe, Pavel Sorokin, Russia's deputy energy minister, said. Exports to Asia have tripled since the East Siberia-Pacific Ocean pipeline opened in 2010.
"We have been supplying as much as we can to Asia, as this is a premium market," Sorokin said.
The Trump administration is imposing the sanctions to cut the flow of oil money into the Iranian regime, which he accuses of sponsoring terrorism.
Oil industry opposes Trump's ethanol extension
The Trump administration's decision to extend waivers for gasoline that contains 15 percent ethanol met strong skepticism from the American Petroleum Institute.
API argues that higher ethanol blends lead to higher automobile repair bills. The Trump administration proposed a deal where volatility waivers for ethanol could be extended in exchange for reforming renewable fuel credits for refiners and blenders. The RIN credits were meant to help refiners meet their production quotas even as fuel efficiency standards reduce demand for gasoline.
"This was never a deal to begin with. It's not a win for industry, and it's certainly not a win for consumers. We do not view this as a fair, balanced policy at all," API Downstream and Industry Operations Group Director Frank J. Macchiarola.
Using ethanol made from corn benefits farmers and Trump wants to allow year-round use of ethanol blended gasoline, which is currently prohibited in the summer. Trump plans a trip to Iowa, a major corn producer, later this month to campaign for Lt. Gov. Kim Reynolds.
