U.S. Sanctions Against Iran Fuel Brent Oil Price Surge

Investor concerns over the imposition of sanctions on Iranian crude oil exports by the United States triggered a rise in Brent crude oil prices, pushing them back above US$85/barrel. In Wednesday's (October 3rd) trading, based on Bloomberg data up to 3:20 PM WIB, the benchmark crude oil price stood at US$85.07/barrel, up 0.32% from the previous day's close. The last time Brent crude oil prices were above US$85/barrel was on October 30, 2014. They then experienced a downward trend, reaching their lowest level of US$27.88/barrel on January 20, 2016.

The threat of disrupted global oil supplies, previously from Venezuela and now from Iran, could further drive up Brent crude oil prices. This is despite efforts by the Organization of the Petroleum Exporting Countries (OPEC) to increase production. Brent crude oil prices plummeted below US$30/barrel in January 2016 due to decreased demand resulting from a global economic slowdown.

In the domestic market, the rise in Brent crude oil prices to US$85/barrel has weakened the Indonesian Rupiah, pushing it past Rp 15,000/US dollar. Market players are using the rising oil prices as an opportunity to accumulate US dollars, anticipating a resurgence in the trade deficit for oil and gas this month.