Mubasher: Oil prices sustained their gains on Thursday on the back of concerns over Iranian supplies after the reinstatement of US sanctions against Tehran, halting Wednesday’s drops amid an escalation in the trade dispute between Washington and Beijing.
Earlier in the day, global Brent crude futures traded at $72.48 per barrel (pb), 0.3% higher from their last close after falling more than 3%, as US Nymex futures rose 0.2% to $67.04 pb from their last session, following a 3.22% drop in the previous session.
However, by 8:15 am GMT, Brent crude futures declined 0.01% to $72.27 pb, while Nymex futures dropped 0.07% to $66.89 pb.
"The geopolitical risk from Iran is keeping a floor under the price," Tokyo-based Mitsubishi oil risk manager Tony Nunan told Thomson Reuters, adding that the market is still buttressed by the fears over the renewed US sanctions against Tehran.
Washington’s re-imposed sanctions on Iran entered into effect on Tuesday, targeting the country’s purchases of US dollars, in which oil is traded. Moreover, a raft of sanctions, which would hit the country’s oil and gas industry, is due to come into effect on 4 November.
Until then, the US demanded countries to cut their purchases of Iranian crude to zero. Tehran is the Organization of Petroleum Exporting Countries’ (OPEC) third-largest producer.
Moreover, the US Energy Information Administration (EIA) reported that crude stockpiles fell 1.4 million barrels in the week ended 3 August.
However, the ongoing trade dispute between the US and China cast the global markets into uncertainty, as investors are concerned over a slowdown in the world’s two largest economies would weaken demand for commodities.
Though China’s crude imports rebounded a little to 8.48 million barrels per day (bpd) in July, from 8.18 in the previous month, after two monthly declines, they were still among the lowest levels seen this year due to a waning demand from independent refineries, also known as “teapots.”
Moreover, Iraq trimmed official selling prices for September deliveries of Basra Light crude for Asian consumers on Thursday, the fact which might keep a lid on price gains.
