NEW YORK: Oil futures rose on Wednesday, with Brent reaching $80 a barrel, after a larger-than-expected drop in US crude inventories and as US sanctions on Iran added to concerns over global oil supply.
Benchmark Brent crude futures rose 47 cents to $79.53 a barrel, by 1649 (GMT). The global benchmark earlier reached $80.13 a barrel, its highest since May 22.
US West Texas Intermediate (WTI) crude futures rose 93 cents to $70.18 a barrel, a one-week high.
US crude inventories fell by 5.3 million barrels in the last week, the US Energy Information Administration said on Wednesday. Analysts had expected a decrease of 805,000 barrels.
“A drawdown in crude oil inventories isn’t very comforting when you’re going to lose a lot of Iranian crude in a couple of weeks,” said Phil Flynn, an analyst at Price Futures Group.
Since spring, when the Trump Administration said it would impose sanctions on Iran, traders have been focusing on the impact they could have on global supply. The sanctions will target Iran’s oil exports from November.
“Iran is increasingly becoming the preoccupation of the crude market. The last couple of weeks have seen the expected squeeze on Iranian crude flows taking shape, with overall outflows down markedly,” consultant JBC Energy said.
Russian energy minister Alexander Novak on Wednesday warned of the impact of US sanctions against Iran.
“This is a huge uncertainty on the market how countries, which buy almost 2 million barrels per day (bpd) of Iranian oil, will act.”
Published in Dawn, September 13th, 2018