Oil rises on geopolitical concerns

LONDON: Oil recovered some ground on Wednesday after the previous day’s slide, helped by concerns about possible renewed US sanctions on major exporter although price gains were capped by rising US supply. Brent crude oil futures were up 31 cents at $73.44 a barrel by 0900 GMT, after falling nearly 3 per cent on Tuesday to its lowest in two weeks. US West Texas Intermediate (WTI) crude futures rose 50 cents to $67.75 per barrel.
“Geopolitical noise remains loud and in part pushed oil prices towards $75 per barrel,” said Norbert Ruecker, head of commodity and macro strategy at Julius Baer. ”The elevated uncertainty suggests volatile but range-bound oil prices going forward.”
Iran, a member of the Organization of the Petroleum Exporting Countries, re-emerged as a major oil exporter in January 2016 when some international sanctions against Tehran were lifted.
Iran’s oil exports hit 2.6 million barrels per day (bpd) in April, according to the Oil Ministry, a record since the lifting of sanctions.
China and India bought more than half of the oil.
“The expectation that the US will leave the sanctions waivers is leading Iran to sell as much as it can,” Petromatrix strategist Olivier Jakob said.
However, the rising value of the dollar since mid-April and soaring US supplies has helped check further oil price gains, traders said.
US crude inventories rose by 3.4 million barrels to 432.575 million in the week to March 27, according to a report by the American Petroleum Institute on Tuesday.
Rising inventories are partly due to soaring US production, which jumped by a quarter in the last two years to 10.6 million bpd.
The United States has now overtaken Saudi Arabia to become world’s second biggest crude producer after Russia. — Reuters