Oil prices rose on Thursday and traded near their highest in two weeks on supply concerns after the United States imposed new sanctions to curb Iranian oil exports.
Brent crude futures rose 54 cents, or 0.82%, to $66.39 a barrel by 0924 GMT, and U.S. West Texas Intermediate crude was at $63.11 a barrel, up 64 cents, or 1%.
Both benchmarks settled 2% higher on Wednesday at their highest levels since April 3 and are on track for their first weekly rise in three. Thursday is the last settlement day of the week ahead of the Good Friday and Easter holidays.
The new US sanctions on Iranian oil exports and hawkish comments on the issue from the US Treasury are increasing supply concerns and helping support crude, said UBS analyst Giovanni Staunovo.
President Donald Trump’s administration issued new sanctions targeting Iran’s oil exports on Wednesday, including against a China-based “teapot” oil refinery, ramping up pressure on Tehran amid talks on the country’s escalating nuclear programme.
Adding to supply concerns, the Organization of the Petroleum Exporting Countries (OPEC) said on Wednesday it had received updated plans for Iraq, Kazakhstan and other countries to make further output cuts to compensate for pumping above quotas.
“I think the rally has a couple of factors behind it – short-covering, the weaker USD, which makes crude oil cheaper to buy, and the U.S. pressure on Iran,” IG market analyst Tony Sycamore said.
“If we assume that U.S. growth is going to be flat at best for the next two quarters and Chinese GDP is set to slow to somewhere between the 3%-4% band, it’s not good for crude oil,” Sycamore said.
U.S. crude stocks rose while gasoline and distillate inventories fell last week, the Energy Information Administration said on Wednesday.
OPEC, the International Energy Agency and several banks, including Goldman Sachs and JP Morgan, cut forecasts on oil prices and demand growth this week as U.S. tariffs and retaliation from other countries threw global trade into disarray.
