Oil prices rise by more than $1 a barrel on potential Iran supply disruption
SEATTLE (Oil Monster): Oil prices surged by more than 2% on Tuesday as the prospect of disruptions to Iranian crude exports overshadowed possible increased supply from Venezuela.
Brent futures jumped by $1.60, or 2.5%, to settle at $65.47. U.S. West Texas Intermediate crude settled at $61.15 a barrel, climbing $1.65, or about 2.8%.
"The oil market is building in some price protection against geopolitical drivers," said PVM Oil Associates analyst John Evans, highlighting the potential exclusion of Iran's exports, trouble in Venezuela, talks on Russia's war in Ukraine and U.S. interest in taking control of Greenland.
Iran, one of the top producers in the Organization of the Petroleum Exporting Countries, is facing its biggest anti-government demonstrations in years. A government crackdown against protesters that an Iranian official says has killed about 2,000 people and led to the arrest of thousands more, drew a warning from U.S. President Donald Trump of possible military action.
Trump said on Monday that any country that does business with Iran will be subjected to a tariff rate of 25% on any business conducted with the United States. China is the biggest customer for Iranian crude.
"I don't think China, for example, is going to shy away from Iranian barrels but if it did, and if everybody did, that would reduce global supplies by 3.3 million barrels a day that are currently supplied to the market by Iran," said Bob Yawger of Mizuho Securities in New York.
On Tuesday, Trump posted on his social media site that protesters in Iran should "take over your institutions" and that "help is on its way."
Trump said he had cancelled meetings with Iranian officials until protester deaths had stopped. Prices briefly rose by more than 3% to a three-month high following the statement.
Also signalling tighter supplies ahead, four Greek-managed oil tankers were struck by unidentified drones on Tuesday. The tankers were in the Black Sea on the way to load oil at the Caspian Pipeline Consortium terminal off the Russian coast, eight sources told Reuters.
Worries over a supply glut have taken a backseat for now, said Rystad analyst Janiv Shah, adding that excess refinery throughput in Europe was weighing on the gasoil market.
Courtesy: www.reuters.com