Oil gains as concern heats up over Iran sanctions, Venezuelan output

Despite this, Otunga said "the sustainability of the rally is a concern" as it was fueled largely by political risk in the Middle East.

Oil prices were strong but off their highs midweek as a bearish build-up in United States crude stockpiles was countered by concerns that President Donald Trump could decide to jettison Iran's nuclear deal.

Now, French President Emmanuel Macron has proposed a new deal to offer Trump, but if the USA president shuns it, it will be time of more tension and uncertainly, Macron said, as quoted by Bloomberg.

After initial losses on the release of the data, US crude futures rebounded and pared losses, trading down 4 cents at $67.66 a barrel by 10:57 a.m. EDT (1457 GMT).

This comes a day after French President Emmanuel Macron said he expected Trump to pull out of the 2015 deal.

Iran is now the third-largest oil producing country, only trailing behind Saudi Arabia and Iraq, all members of the Organization of Petroleum Exporting Countries (OPEC). That spark could come from reinstituting sanctions.

"But not only is there the possibility of sanctions on Iran, there's also the possibility of Venezuelan and Russian sanctions".

Oil output in Venezuela, a member of the Organization of the Petroleum Exporting Countries (OPEC), has fallen from nearly 2.5 million barrels per day (bpd) to just around 1.5 million bpd now due to political and economic turmoil in the South American country.

U.S. crude production rose by 46,000 bpd on the previous week, to 10.59 bpd.

Trade data in Thomson Reuters Eikon shows seaborne imports of crude by Asia's main buyers will hit a record this month.

Brent crude oil futures were at 74.27 per barrel at 0643 GMT, up 27 cents, or 0.4 percent, from their last close. Bloomberg reports that some traders have already stopped signing contracts for Iranian crude whilst others have inserted clauses that allow them to stop taking oil from Iran if sanctions are reimposed.

"Market sentiment is turning increasingly bullish towards the commodity", said Lukman Otunuga, research analyst at futures brokerage FXTM.

US crude oil inventories rose by 2.2 million barrels in the week to April 20, to 429.74 million barrels, while domestic output, driven by shale extraction, climbed by 46,000 bpd to 10.59 million bpd.

This story has not been edited by Firstpost staff and is generated by auto-feed.

  • Eleanor Harrison