Abu Dhabi: Brent, the international benchmark for crude oil, could to rise above $85 (Dh312) per barrel in the coming months due to a combination of US sanctions on Iran and a potential Opec supply crunch, analysts say.

West Texas Intermediate (WTI), the American crude benchmark, could trade north of $80 per barrel, although it also faces supply-side risks due to the current annual US hurricane season.

“On the whole, the scope, magnitude and broad-scale implications of the reimposition of Iranian sanctions on oil prices has not been fully priced into markets at the current juncture and the uncertainty surrounding the disruptions to Iranian oil supply will continue testing oil markets in the weeks ahead,” Ehsan Khoman, Head of MENA Research and Strategy at MUFG Bank, told Gulf News.

When markets closed on Friday, Brent was trading at $78.09 per barrel, down by 0.12 per cent whereas West Texas Intermediate was at $68.99 per barrel, up by 0.58 per cent with a difference of $9 per barrel between the two.

US President Donald Trump announced in May the reimposition of sanctions on Iran and asked all firms to stop dealing with the Islamic republic or face punitive measures starting from November.

The first batch of sanctions on Iran came into effect last month, with sanctions on oil sales coming into force from November.

However, Jaafar Al Taie, managing director of the UAE-based Manaar Energy Group, said there would be limited impact on oil prices due to sanctions on Iran because of rise in the production from the United States.

“Even if the price rises as a result of US sanctions on Iran, it could fall as a result of a rise in oil production from the US, which has overtaken Saudi Arabia and Russia as the world’s biggest oil producer.”

He also said there is uncertainty on how much Iranian oil is going to be taken off the market and which countries will stop importing oil from Iran.

“We don’t know how much Iranian oil is going to be taken off the market. So far, we can see only 30 per cent will be taken off the market with top importer China expected to continue to import oil. I expect India to cut some imports from Iran but India consumes 500,000 barrels a day of Iranian oil and I don’t expect them to cut all of it.”

Investment in new oil production will also impact oil prices in the coming days.

“Global investment is uncertain and we don’t know how many countries are going to invest in the new production. The US energy secretary Rick Perry is talking about making joint investment fund with Saudi Arabia and Russia to increase global investment and if that happens, the price will stay in the $80 per barrel range.”

“There is not necessarily going to be upward price movement because of sanctions on Iran, the equation is not that simple. There is still dollar impact on the price. The price is going to fluctuate around $80 range for the remainder of 2018.”

“The main drivers will be one: the amount of Iranian oil taken off the market, two: the US supply and three: the level of investment in new production. Those will be the main drivers that decide where the price settles.”

Speaking on the growing gap between the prices of Brent and West Texas Intermediate (WTI), he said WTI reflects the domestic situation in the US, whereas Brent is more of a global index and a closer reflection of what happens in the world.

“On the one hand in the US, there is a growing production, on the other, you have pipeline constraints and infrastructure constraints. What happens is WTI is more of a rigid index, it doesn’t move as much as Brent which is more fluid and reflects more global dynamics.”