Friday, May 17, 2019 2:01 pm
Oil edged higher toward 73 dollars a barrel on Friday, supported by real and threatened supply disruptions in the Middle East and heading for a weekly gain.
U.S. sanctions on Iran have cut the OPEC member’s crude exports further in May, adding to supply curbs resulting from an OPEC-led pact.
Meanwhile, rising tensions in the Middle East this week has raised concern about additional supply disruption.
Brent crude rose 15 cents to 72.77 dollars a barrel at 0908 GMT.
The global benchmark is up almost three per cent this week, having ended last week steady and fallen the week before.
U.S. West Texas Intermediate crude added 24 cents to 63.11 dollars.
“The Middle East is acting as a tinderbox for conflict,” said Stephen Brennock of oil broker PVM.
“So, long as this remains the case, the energy complex will continue to be supported by bullish supply-side signals.”
The mounting tension overshadowed bearish developments for oil prices this week, such as an unexpected increase in U.S. crude inventories.
A Saudi-led military coalition in Yemen carried out several air strikes on the Houthi-held capital Sanaa on Thursday after the Iranian-aligned movement claimed responsibility for drone attacks on two Saudi oil pumping stations.
Earlier this week, staffer were evacuated from the U.S. embassy in Baghdad, while U.S. President Donald Trump ordered the deployment of an aircraft carrier group, B-52 bombers and Patriot missiles to the Middle East.
“When tensions are this high, with the U.S. deploying a sizable military force, even a mistake or a tactical error by Iran could ignite the Middle East powder keg,” Stephen Innes, Head of Trading and Market Strategy at SPI Asset Management said.
“There are lots of supply risks with tensions this high.”
The market is also awaiting a decision from the Organisation of the Petroleum Exporting Countries (OPEC) and other producers over whether to continue with supply cuts that have boosted prices more than 30 per cent so far this year.
A meeting of an OPEC-led ministerial committee in Saudi Arabia this weekend will assess member states’ commitment to their deal reducing oil production and may make a recommendation on whether to extend or adjust the pact. (dpa/NAN)