Global oil prices dropped after the American Petroleum Institute (API) data showed a surprise increase in US crude stocks. However, losses were restricted due to ongoing tensions in the Middle-East.

Brent crude futures slipped 40 cents to $70.84 a barrel, while US West Texas Intermediate (WTI) crude futures dropped 56 cents to settle at $61.22 per barrel, reported Reuters.

According to API, the US crude stocks increased by 8.6 million barrels in the week to 10 May to 477.8 million. This is contrary to analysts’ expectations for a fall of 800,000 barrels. Official data from the Energy Information Administration (EIA) is awaited.

Earlier, oil prices jumped after Saudi Arabia announced that attacked two of its oil pumping stations have been struck by armed drones. These incidents happened amidst growing tensions between the US and Iran with Washington placing sanctions on Iranian exports.

Swiss bank UBS was quoted by Reuters as saying: “Given that nearly one-third of global oil production and nearly all of global spare capacity are in the Middle East, the oil market is very sensitive to any attacks on oil infrastructure in this region.”

Apart from the Middle-East tensions, the oil market received support from the ongoing trade dispute between the US and China. Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) estimated that oil demand will surpass the expected levels in 2019 with shrinking supplies. The market will further tighten if OPEC continues to restrict output throughout 2019.

On the other hand, the International Energy Agency said the increasing US output will largely substitute falling exports from Iran and Venezuela, requiring ‘very little extra’ oil from OPEC.