Oil prices strengthen more than 1% on Iran risk

Catogory : Market Report

Oil prices rose more than 1% on Monday, as investors worried about possible supply disruptions in the energy-rich Middle East after Iran’s seizure of a British tanker last week. Brent crude LCOc1 futures climbed 79 cents, or 1.3%, to settle at $63.26 a barrel. West Texas Intermediate (WTI) crude CLc1 settled up 59 cents, or 1.1%, at $56.22 a barrel. .Last week, WTI fell over 7% and Brent lost more than 6%, weighed down by economic worries and the return of U.S. production in the Gulf of Mexico after a hurricane.

“Some of the selling pressure from demand concerns seems to have evaporated this week,” source said. “The fears about geopolitics seem to have halted some of that selling pressure.” Iran’s Revolutionary Guards said on Friday they had captured a British-flagged oil tanker in the Gulf in response to Britain’s seizure of an Iranian tanker earlier this month. The move stoked fears of potential supply disruptions in the Strait of Hormuz at the mouth of the Gulf, through which flows about one-fifth of the world’s oil supplies, but no major escalation with Britain or the United States appears imminent.

“In the cat-and-mouse game that Iran is playing with the U.S., it is taking calculated risks,” Last week, data showed shipments of crude from Saudi Arabia, the world’s top oil exporter, fell to a 1-1/2-year low in May. Speculative money is flowing back into oil in response to the escalating dispute between Iran, the United States and other Western nations, along with signs of falling supply. In early May, new, tighter U.S. sanctions on Iran took effect.