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July 11, 2019

Oil prices reach six-week high

Oil prices have reached a six-week high as a storm built in the Gulf of Mexico threatens crude output and an incident with a UK tanker in the Middle East stressed ongoing tensions in the region.

Oil prices have reached a six-week high as a storm built in the Gulf of Mexico threatens crude output and an incident with a UK tanker in the Middle East stressed ongoing tensions in the region.

Brent crude futures were up 40 cents at $67.41 a barrel, while US West Texas Intermediate crude futures increased 31 cents, at $60.74 per barrel, Reuters reported.

Three Iranian vessels tried to block the passage of a British ship run by oil and gas company BP via the Strait of Hormuz. The move follows warning from Iran that the UK would face consequences over the seizure of an Iranian oil tanker. However, Iran officials withdrew following warnings from a British warship.

Reuters said oil prices were also supported by a drop in the dollar after Federal Reserve Chairman Jerome Powell bolstered expectations for US interest rate cuts.

Oil prices were also boosted by a decline in US inventories. The Energy Information Administration said US crude stocks dropped 9.5 million barrels in the week to July 5, more than the 3.1 million-barrel draw analysts had anticipated as refineries ramped up production.

US oil producers have reduced nearly a third of their production in the Gulf of Mexico ahead of what is expected to be one of the first major storms of the Atlantic hurricane season.

Fifteen production platforms and four rigs were evacuated in the north central Gulf of Mexico, according to a US regulator.

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