Oil Prices Continue To Rise On Middle East Tension

Investing.com – Oil prices continued to climb on Wednesday morning in Asia amid tensions in the Middle East.

 for May delivery were trading at $63.73 a barrel in Asia at 11:00PM ET (03:00 GMT), up 0.30%. for May delivery, traded in London, were also up 0.30% at $67.62 per barrel.

Saudi Arabia’s Crown Prince Mohammed bin Salman arrived in Washington on Tuesday for a state visit, raising speculation for an agenda to ramp up pressure on Iran. Following renewed criticism of the 2015 nuclear deal, the U.S. could reimpose sanctions on Iran, a concern that has lifted oil prices.

If the U.S. does reimpose sanctions on Iran, that would likely result in a 250,000 to 500,000 barrels per day (bpd) drop in its exports by year-end, according to energy consultancy FGE.

The nomination of Mike Pompeo as new U.S. Secretary of State also raises the likelihood of oil trade disruptions, given he fiercely opposed the 2015 pact as a member of Congress.

Further supporting prices is healthy demand for oil. The American Petroleum Institute said on Tuesday that U.S. crude stocks fell by 2.7 million barrels in the week ended March 16 to 425.3 million, a sign of healthy demand.

However, non-OPEC supply, led by the U.S., will grow by 1.8 million bpd this year, while demand will only grow by about 1.5 million bpd.

The U.S. has already surpassed top exporter Saudi Arabia in crude production and is expected to overtake Russia as the top producer by late 2018, with output of more than 11 million bpd.

The relentless surge in U.S. production is capping oil prices and undermining efforts from the Organization of the Petroleum Exporting Countries (OPEC) to prop up prices by withholding production. OPEC has been cutting output by around 1.2 million bpd since January 2017, which has inadvertently allowed the U.S. to take more market share.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.