Oil prices settle $1 higher after US issues new Iran-related sanctions
Shafaq News/ Oil prices rose on Thursday after the UnitedStates issued new Iran-related sanctions and renewed tensions in the MiddleEast countered strength in the dollar.
Brent crude futures settled up $1.22, or 1.72%, at $72 abarrel.
The U.S. West Texas Intermediate crude (WTI) contract forApril expired on Thursday and settled up $1.10 or 1.64% at $68.26.
The more actively traded WTI May contract settled up $1.16,or 1.73% at $68.07.
The U.S. on Thursday issued Iran-related sanctions,targeting entities including for the first time a Chinese "teapot",or independent refinery, and vessels that supplied crude oil to such processingplants.
China is the largest importer of Iranian oil. “Teapot”refiners are private Chinese refineries that are the primary purchasers ofIranian oil.
Iran produces more than 3 million barrels per day of crudeoil.
"We were looking for some kind of catalyst to move andthat was the ticket that pushed us back towards the high," said PhilFlynn, senior analyst with Price Futures Group.
Elsewhere, OPEC+ issued a new schedule for seven membernations including Russia, Kazakhstan, and Iraq to make further oil output cutsto compensate for pumping above agreed levels.
The plan will represent monthly cuts of between 189,000barrels per day and 435,000 bpd, according to a table on OPEC's website. Thescheduled cuts last until June 2026.
Meanwhile, U.S. crude inventories rose 1.7 million barrels,exceeding expectations for an increase of 512,000 barrels in an earlier Reuterspoll.
'Choppy Upward Drift’
Putting a lid on crude prices was the dollar, which inchedup after the Federal Reserve indicated on Wednesday it was in no rush to cutinterest rates further this year due to uncertainties around U.S. tariffs.
The U.S. dollar was up 0.5%, making crude more expensive forforeign buyers.
The U.S. central bank left its key interest rate unchangedon Wednesday, a move widely anticipated by the market, but maintained itsprojection of two 25-basis-point rate cuts by the end of this year.
Interest rate cuts typically boost economic activity andenergy demand.
Some analysts, however, are expecting an uneven oil priceuptrend in the near term.
"I am expecting a choppy upward drift in the oilmarkets right now," said Kelvin Wong, senior market analyst at OANDA,adding that stimulus measures by China and renewed hostilities between Israeland Hamas were bullish price drivers.
Global risk premiums rose after Israel launched a new groundoperation on Wednesday in Gaza after breaking a ceasefire of nearly two months.
"Amid the prevailing uncertainty, the risk of sanctionsis once again coming into focus, as the Trump administration adopts a tougherstance on Venezuela, Iran, and Russia," J.P. Morgan analysts said in anote on Thursday.
The U.S. kept up airstrikes on Houthi targets in Yemen inretaliation for the group's attacks on ships in the Red Sea. U.S. PresidentDonald Trump has also vowed to hold Iran responsible for future Houthi attacks.
Trump's push to impose tariffs on Canada, Mexico and Chinahas raised recession fears, weighing on oil prices.
"Tariff concerns seem to be holding oil back abit," Flynn added.
J.P. Morgan said it expects Brent prices to recover into themid-to-high $70s over the next couple of months, before dipping below $70 andending the year in the mid-$60s, averaging around $73.
(REUTERS)
