Expectations of renewed US sanctions on major oil exporter Iran have caused an upward swing in oil prices.
However, the further growth in prices was limited by rising US supplies.
Brent crude oil futures jumped 29 cents, or 0.4%, trading at $73.42 per barrel, while US West Texas Intermediate (WTI) crude futures soared 45 cents, or 0.7%, to reach $67.70, according to Reuters.
In 2015, the US lifted sanctions on Iran in exchange for some agreed restrictions on Iran’s nuclear programme.
Since then, Iran has reclaimed its position as a major oil exporter.
Iran Oil Ministry’s news agency SHANA reported the country’s oil exports in April touched 2.6 million barrels per day (bpd), with China and India emerging as the major buyers.
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US President Donald Trump is expected to arrive at a decision by 12 May on whether to re-introduce sanctions on Iran.
Saxo Bank commodity strategy head Ole Hansen was quoted by the news agency as saying: “If Trump abandons the deal, he risks a spike in global oil prices. The re-introduction of US sanctions would hurt Iran’s ability to transact in dollars.
“A reintroduction of sanctions without seeing other OPEC members increase production could remove an estimated 300,000bpd to 500,000bpd of Iranian barrels.”
However, a section of analysts sounded cautious in their assessment of the situation.
US bank Citi was quoted by the news agency as saying: “If the geopolitical tension subsides or results in a smaller supply disruption than currently priced in, we are likely to see a sharp pull-back in investor positioning and an even sharper correction in oil prices than the $5 or so that might be warranted even as macro uncertainties persist.”
Meanwhile, the rise in oil prices was capped by US crude stockpiles, which increased by 3.4 million barrels to 432.575 million in the week of 27 March this year, as per data released by the American Petroleum Institute.