TEHRAN – The British investment bank Barclays said the U.S. decision on ending the waivers on Iran oil sanctions will tighten crude markets significantly in the short term, Reuters reported.

“The announcement implies material upside risk to our current $70 per barrel average price forecast for Brent this year, compared with the year-to-date average of $65 per barrel,” the bank said.

Washington this week demanded that buyers of Iranian oil stop purchases by May 1 or face sanctions.

While Saudi Arabia, the United Arab Emirates and other members of the Organization of the Petroleum Exporting Countries will likely fill the gap in supply created in the wake of tighter U.S. sanctions, the bank expects Riyadh to be slower to adjust than it was when crimping production late last year.

Barclays also said that the U.S. move increased the risk of conflict in the Middle East, including the potential closure of the strategic Strait of Hormuz.

The response of Iran’s biggest oil customers, China and India, will also be key as both could find it hard to completely wean themselves off supplies from the Middle Eastern nation, Barclays said.

EF/MA