Tension Between U.S. and Iran Pushes Crude Oil Futures Higher

On Thursday, oil prices traded higher due to market expectations of a possible disruption in Iran’s production due to the potential sanctions which may be imposed by the United States against them. This was due to a statement from French President Emmanuel Macron stating that he expects the country to pull out from a deal with Iran back in 2015 which required Iran to end its nuclear program in exchange for sanctions being lifted by the U.S.

Oil prices were seen trading higher above the $70 per barrel over the past month due to the sudden decline in crude oil inventories and production in the United States which has become an issue over the past couple of months. Rising U.S. inventories have also offset the efforts of the Organization of the Petroleum Exporting Countries to curb a global oversupply as well as stabilize oil prices.

Recent Oil Price Movement

Due to the possible sanctions being imposed by the United States against Iran as well as declining output seen in Venezuela in the middle of a rising oil demand, crude oil prices rose during Thursday’s trading session.

Brent crude oil futures were by 0.4% or 27 cents selling at 74.27 per barrel while the U.S. West Texas Intermediate crude futures traded 0.2% higher to settle at $68.19 per barrel.

Most crude futures traded above the $70 per barrel level for the first time last week due to report from the American Petroleum Institute of a 1 million barrel draw in the U.S. crude oil inventory helping oil prices recover from the recent buildup in U.S. crude inventories.

Oil prices which started the year mostly positive has been pressured since March despite the efforts of the OPEC due to a number of geopolitical factors as well as the growing production in the United States. However, crude oil prices touched a three-year high last week on earlier reports of a sudden U.S. crude supply decline.

High U.S. Inventories

Despite the recent recovery of oil prices, a number of factors including U.S. inventories hitting around 2.2 million barrels in the week that ended on April 20 threatens the recent rally of crude oil. Average production in the United States hit ten million barrels per day last February and is currently hovering around that level is threatening the recovery of oil prices as well as overshadowing the efforts of the OPEC in avoiding a global gut supply.

According to the U.S. Energy Information Administration, gasoline production has averaged around 9.9 million barrels per day during the previous week while distillage production came in at 5 million barrels per day. While growing supplies in the United States have become a major factor in the movement of oil prices over the past couple of weeks, analysts have stated that a disruption in the supplies or production of other countries in the midst of a growing supply shifts the market’s attention from the crude product of the United States.

Read also: Crude Oil Prices in Asia Increases

FSMSmart gives you the latest news updates, market trends, and news about forex, commodities, stocks and many more! Open an account now and learn more about other investment opportunities on FSM Smart.