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Oil prices rise on Iran sanctions worries

27 April, 2018, 10:02 | Author: Samuel Sharp
  • Markets Insider

The oil price has been boosted in recent months by mounting geopolitical fears as oil markets have tightened, with Venezuela's output falling sharply and expectations the USA will return to targeting Iran's oil exports if the Trump administration withdraws from the 2015 nuclear deal. It is widely anticipated that President Trump will pull the USA out of the Iran nuclear deal, which is bullish for prices, said Abhishek Kumar, senior energy analyst at Interfax Energy's Global Gas Analytics.

The West Texas Intermediate for June delivery rose 0.35 us dollars to settle at 68.05 dollars a barrel on the New York Mercantile Exchange, while Brent crude for June delivery added 0.14 dollars to close at 74.00 dollars a barrel on the London ICE Futures Exchange.

Venezuela's plunging output comes amid strong demand as well as concerns that supplies from the Middle East, by far the world's biggest oil producing region, could also be disrupted, especially should the United States in May re-impose sanctions against OPEC-member Iran.

Trump will decide by May 12 whether to restore the sanctions, which would probably result in a reduction of Iranian oil exports.

However, prices soon steadied amid signs that French President Emmanuel Macron was struggling in his push for a new deal that might prevent further U.S. sanctions on Iran. Plunging Venezuelan output and looming USA sanctions against Iran come against a backdrop of strong demand, especially in Asia, the world's biggest oil-consuming region.

However, not all market indicators point towards tighter supplies.

American crude oil output has overtaken that of top exporter Saudi Arabia.

Oil prices experienced more stability on Wednesday, but were below more than three-year highs reached the previous session as rising US fuel inventories and production dragged on an otherwise bullish market.

West Texas Intermediate was up about 1% to $68.70 a barrel at 8:45 a.m. ET.

USA crude stocks rose last week as refineries cut output, while gasoline stocks increased and distillate inventories fell, the Energy Information Administration said on Wednesday. During the last month crude oil imports averaged over 8.2 million barrels per day, 1.5% more than the same four-week period a year ago. Only Russia now produces more, at nearly 11 million bpd.



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