Oil prices increased for the second time this week following a decline in US stocks and concerns over supply disruption in the Middle East.
The decline in US stocks has helped support the market, while refinery maintenance works in the US has reached its peak this month. Furthermore, with the US taking a tough stance against Iran, several investors are hesitant to aggressively sell oil in the market.
Brent crude futures inched up by 40 cents to reach $67.85 a barrel, while US West Texas Intermediate (WTI) crude futures grew 36 cents to reach $63.90 a barrel, reported Reuters.
Saudi Arabia’s Crown Prince Mohammed bin Salman is on a state visit to Washington, which has increased speculation that the US might look at re-imposing sanctions on Iran.
Petromatrix strategist Olivier Jakob was quoted by Reuters as saying: “You still have geopolitical considerations and possible US action on Iranian sanctions that is going to be relatively prompt in May.”
“So even though you do see signs that the market is lax on the physical side, do you go aggressively bearish when you have the potential for something happening between the US and Iran?”
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If the US decides to reimpose sanctions on Iran, according to energy consultancy FGE, the move could see a 250,000 to 500,000 barrels per day (bpd) fall in Iran’s exports by the end of this year.
The American Petroleum Institute said that US inventories dropped by 2.7 million barrels to 425.3 million in the week ending 16 March, as opposed to expectations of a 2.6 million barrels increase.