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Tuesday, May 24, 2022

Oil rises 1 percent ahead of Iran sanctions

Oil rises 1 percent ahead of Iran sanctions© Reuters. An oil well pump jack is seen at an oil field supply yard near Denver


By Aaron Sheldrick

TOKYO (Reuters) – Oil prices climbed for the first time in three days on Wednesday, rising around 1 percent ahead of the start of U.S. sanctions against Iran next week and as stock markets clawed back some of the losses they racked up this month.

futures had gained 83 cents, or 1.1 percent, to $76.74 a barrel by 0746 GMT. They fell 1.8 percent on Tuesday, at one point touching their lowest since Aug. 24 at$75.09 a barrel.

U.S. West Texas Intermediate (WTI) crude futures advanced 55 cents, or 0.9 percent, to $66.73 a barrel on Wednesday. They dropped 1.3 percent the day before, after hitting their lowest since Aug. 17 at $65.33 a barrel.

Traders said oil received some support from stock markets, which pulled back from 20-month lows on Wednesday amid pledges by China to support its markets.

Analysts said oil prices were also supported by the upcoming U.S. sanctions against Iran’s crude exports that will start on Nov. 4.

Imports of Iranian crude oil by major buyers in Asia hit a 32-month low in September, as China, South Korea and Japan sharply cut their purchases ahead of the sanctions on Tehran, government and ship-tracking data showed.

“The bullish argument for crude still centers on Iran sanctions which are due to begin in November and continued output declines from Venezuela,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.

Despite this, Brent remains 12 percent below its $86.74 a barrel October high, and crude is on track to post its worst monthly performance since July 2016.

“Everyone thought we were going to go into the $90s, but now we are heading for the $60s,” said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo, referring to Brent prices.

Oil has been caught in the global financial market slump this month, with equities under pressure from the trade scrap between the world’s two largest economies, the United States and China.

The United States has already imposed tariffs on $250 billion worth of Chinese goods, and China has responded with retaliatory duties on $110 billion worth of U.S. goods.

In a bearish signal, the American Petroleum Institute reported inventories rose 5.7 million barrels last week, more than analyst forecasts for a 4.1 million barrel build.

Investors will look to official government data on U.S. inventories due on Wednesday.

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Source: Investing.com

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