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Oil Prices Head Higher as Iran Export Concerns Intensify

Published 17/05/2018, 15:23
© Reuters.  Oil prices hit 2014 high on worries of Iran sanctions
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Investing.com - Crude prices moved higher in midmorning trade Thursday as increased tensions over Iranian oil exports and the economic situation in Venezuela provided a backstop for the bulls.

New York-traded West Texas Intermediate crude futures gained 45 cents, or about 0.6%, to $71.94 a barrel by 10:19AM ET (14:19GMT).

Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., traded up 66 cents, or roughly 0.8%, to $79.94 a barrel.

Both barrels hit their highest price since 2014 on Thursday, while Brent oil briefly topped the $80 mark after French energy giant Total (PA:TOTF) announced a day earlier that it would withdraw from an Iranian gas deal before the end of the year, unless it was able to obtain a waiver from secondary sanctions from the U.S. government.

U.S. crude has gained around 4% since President Donald Trump announced on May 8 that the U.S. was pulling out of the Iranian nuclear deal and re-imposing sanctions.

Market participants widely expect the move to lead to tighter global oil supplies as they make it more difficult for Iran to export oil.

Iran, which is a major Middle East oil producer and member of the Organization of the Petroleum Exporting Countries (OPEC), resumed its role as a major oil exporter in January 2016 when international sanctions against Tehran were lifted in return for curbs on Iran's nuclear program.

Also increasing concerns over supply, unrest was building in Venezuela ahead of presidential elections on Sunday that nations including the U.S., European Union, Mexico, Brazil or Colombia have labeled as “illegitimate”.

Production in Venezuela plunged to 1.5 million barrels last month, its lowest level in decades due to its ongoing economic crisis.

In other energy trading, gasoline futures rose 0.3% to $2.2601 a gallon by 10:21AM ET (14:21GMT), while heating oil advanced 1.0% to $2.2925 a gallon.

Natural gas futures fell 0.6% to $2.798 per million British thermal units ahead of weekly inventories.

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