Oil rose to the highest level in more than three weeks as political tensions between the U.S. and Iran continued to simmer, with President Donald Trump announcing plans for further sanctions against the OPEC member.
Futures added as much as 1.4 per cent in New York after surging 9.4 per cent last week. Trump tweeted about the sanctions days after abruptly calling off planned air strikes against the Islamic Republic in retaliation for the shooting down of a U.S. Navy drone. Iran’s navy warned the downing of unmanned aircraft could be repeated if intrusions into its airspace continue, according to state news agency Tasnim.
“The events of last week mean that there is much for oil bulls to hang their hats on,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London.
Oil has rallied after falling to the lowest level in almost five months in mid-June as escalating tensions between Washington and Tehran threaten to disrupt crude flows. Hopes that China and the U.S. will restart trade negotiations have also aided prices, with Trump set to meet with Chinese President Xi Jinping at the G-20 summit in Japan this week.
West Texas Intermediate for August delivery rose as much as 79 US cents, or 1.4 per cent, to US$58.22 a barrel on the New York Mercantile Exchange, the highest since May 30. It traded for US$57.82 as of 10:37 a.m. London time. Prices settled up 0.6 per cent on Friday, capping a weekly rally that was the biggest since Dec. 2, 2016.
Brent for August settlement edged up 4 US cents to US$65.24 a barrel on London’s ICE Futures Europe Exchange, after closing up 1.2 per cent on Friday. The benchmark crude contract traded at a premium of US$7.41 to WTI.
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