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Oil held near $71 a barrel on heightened political risks in the Middle East following unrest in Gaza and the return of sanctions against Iran.
Futures in New York gained 0.2%. Dozens of Palestinians were killed in clashes with Israeli troops in Gaza after the US opened an embassy in Jerusalem. Foreign ministers from the UK, France and Germany will meet with their Iranian counterpart, Javad Zarif, to discuss salvaging an accord that allows Iranian oil exports, after the US withdrew last week.
US President Donald Trump’s withdrawal from a 2015 nuclear accord with Iran has driven oil to the highest in more than three years this month. American measures could cut the Persian Gulf nation’s crude exports, and traders are watching whether OPEC and its allies will end their agreement to curb supply and increase production instead to fill in the gap.
“US sanctions on Iran take center stage in the oil market,” said Norbert Ruecker, head of macro and commodity at Julius Baer & Co in Zurich.
West Texas Intermediate crude for June delivery was 15 cents higher at $71.11 a barrel on the New York Mercantile Exchange as of 11:36, after rising 26c on Monday. Total volume traded on Tuesday was in line with the 100-day average.
Brent for July settlement rose 44c to $78.67 a barrel on the London-based ICE Futures Europe exchange, after Monday’s $1.11 gain. The global benchmark crude traded at a $7.49 premium to July WTI, heading for the widest spread since 2015.
Oil for September delivery rose 1.6% to 472.8 yuan a barrel on the Shanghai International Energy Exchange. The contract fell 1.2% on Monday.
Saudi Arabia, OPEC’s de-facto leader, last month pumped the least crude since the output-cut deal began in early 2017. The numbers provided by the kingdom indicate that it could increase production by about 190 000 barrels a day and still respect the limit agreed with fellow members if it decides to compensate for the loss of Iranian barrels.
Supply concerns are also increasing with continuing tensions in the Middle East region. Fifty-five Palestinians were killed in confrontations with Israeli troops Monday after tens of thousands converged on the Gaza Strip border to protest the US embassy in Jerusalem. With more than 1 200 people wounded by live fire, it was the deadliest day in Gaza since Hamas’s last war with Israel in 2014.
Other oil-market news:
• Trump issued a memorandum allowing for cuts to Iranian crude and products purchases by or through foreign financial institutions.
• US oil stockpiles probably fell 1.5 million barrels last week, according to the median estimate of analysts surveyed by Bloomberg.
• OPEC’s compliance with crude-output cuts was at 166% in April, compared with a revised 167% in March, according to Bloomberg calculations from the producer group’s secondary-source data published on Monday.
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