LONDON, July 22 — Oil prices rose more than two per cent today on concerns that Iran’s seizure of a British tanker last week may lead to supply disruptions in the energy-rich Gulf.
Brent crude futures climbed US$1.41 (RM5.80), or 2.26 per cent, to US$63.88 a barrel by 0840 GMT.
West Texas Intermediate (WTI) crude futures were up US$1.13, or 2.03 per cent, at US$56.76 a barrel.
Last week, WTI fell over seven per cent and Brent lost more than six per cent.
Tensions surrounding Iran “have likely added to the already strong geopolitical risk premium”, JBC Energy said in a note.
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 has increased the fear 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.
Britain was weighing its next moves today, with few good options apparent as a recording emerged showing the Iranian military defied a British warship when it boarded and seized the ship.
Capping gains was news that Libya’s Sharara oilfield, the country’s biggest, had resumed production at half capacity today after being shut since Friday, which caused an output loss of about 290,000 barrels per day (bpd).
Meanwhile, data late last week showed shipments of crude oil 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 the oil markets in response to the escalating dispute between Iran, the United States and other Western nations playing out in Gulf waters, along with the signs of falling supply.
The Iranian capture of the ship in the global oil trade’s most important waterway was the latest escalation in three months of confrontation with the West that began when new, tighter US sanctions on Iran took effect at the start of May.
Hedge funds and other money managers raised their combined futures and options positions on US crude for a second week and increased their positions in Brent crude as well, according to data from the U.S. Commodity Futures Trading Commission and the Intercontinental Exchange.
Goldman Sachs yesterday lowered its forecast of growth in oil demand for 2019 to 1.275 million bpd, citing disappointing global economic activity. — Reuters