NEW YORK: Oil prices rose to the highest in two weeks on Thursday after the United States imposed new sanctions to curb Iranian oil exports, elevating supply concerns.
Brent crude futures rose $1.74, or 2.64%, to $67.59 a barrel by 11:30 a.m. EDT (1530 GMT), and US West Texas Intermediate crude was at $64.27 a barrel, up $1.80, or 2.88%. Both benchmarks settled 2% higher on Wednesday at their highest levels since April 3 and are on track for their first weekly rise in three weeks. Thursday is the last settlement day of the week ahead of the Easter holidays and trade volumes are expected to be thin.
Sanctions issued by President Donald Trump’s administration on Wednesday, including against a China-based “teapot” oil refinery, ramp up pressure on Tehran amid talks on the country’s nuclear programme.
“Teapot” is an industry term for small, independent and simple oil refiners. “These are far ranging sanctions, focusing on the Chinese teapot refineries,” said John Kilduff, partner with Again Capital. “It’s a potential supply loss to the market.” Washington also issued additional sanctions on several companies and vessels it said were responsible for facilitating Iranian oil shipments to China as part of Iran’s shadow fleet.
“Sanctions on terminals and local banks would potentially cause more challenges,” said Energy Aspects analyst Livia Gallarati. On the supply side, the Organization of the Petroleum Exporting Countries (OPEC) said on Wednesday it had received updated plans for Iraq, Kazakhstan and other countries to make further output cuts to compensate for pumping above quotas.
“With regards to OPEC+ policy, there is little evidence for now that planned compensation cuts will be adhered to,” Gallarati added. However, OPEC, the International Energy Agency and several banks, including Goldman Sachs and JPMorgan, cut forecasts on oil prices and demand growth this week as US tariffs and retaliation from other countries threw global trade into disarray.
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