Oil prices increased on fears of disruption of supplies in the Middle East after Iran’s seizure of a British tanker and the closure of a field in Libya.

The increase in oil prices was also attributed to the shutdown of the largest oil field in Libya.

Brent crude futures gained 85 cents, or 1.4%, at $63.32 a barrel, while West Texas Intermediate (WTI) crude futures increased by 47 cents, or 0.8%, at $56.10 a barrel, Reuters reported. The international benchmark rose by $1 earlier, while WTI declined by more than 7% and Brent lost more than 6% last week.

OANDA senior market analyst Edward Moya said in a statement: “Falling global demand and rising U.S. stockpiles have helped turn oil charts very bearish, but that may not last as tensions remain high in the Persian Gulf.”

On 19 July 2019, Iran’s Revolutionary Guards said that they had captured a British-flagged oil tanker in the Gulf following Britain’s seizure of an Iranian tanker earlier this month. This triggered fears of supply disruptions in the Strait of Hormuz at the mouth of Gulf.

A US administration official said on Friday that the US will destroy Iranian drones that fly close to its ships. Last week, the US said that its navy ship had destroyed an Iranian drone in the Strait of Hormuz, but Iran denied losing a drone.

The Reuters report said that crude oil supply outages and curbs also helped the increase in oil prices.

Vanguard Markets managing partner Stephen Innes said was quoted by Reuters as saying: “Oil prices got a small boost this morning after Libya’s (NOC) declared force majeure on Sharara crude loaded at Zawiya port.”

On 20 July 2019, Libya’s National Oil Corporation (NOC) reported the closure of the country’s largest oilfield, El Sharara, the previous day, resulting in a production loss of 290,000 barrels per day (bpd).

Last week, data showed that shipments of crude oil from Saudi Arabia had declined to a 1.5-year low in May 2019. For the third consecutive week, US energy firms reduced the number of oil rigs operating as they implement plans to cut down spending amid a global supply glut.

According to data from the US Commodity Futures Trading Commission and the Intercontinental Exchange, hedge funds and other money managers raised their futures and options positions on US crude for the second week and increased their positions in Brent crude as well.