Crude posted its biggest weekly gain since July last year as the appointment of a hardliner for US national security adviser fueled speculation sanctions on Iran will be reimposed.
Futures in New York climbed 5.7 percent this week.
US President Donald Trump is taking a hawkish foreign-policy turn by picking John Bolton for the job, drawing the market’s attention to one of OPEC’s largest producers.
“We’re seeing the Bolton premium being priced in,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund. “There’s geopolitical jitters. This switch in national security advisers is going to make the market uneasy about what lies ahead in terms of dealing with Iran.”
Crude this week surpassed US$65 a barrel for the first time since early last month as geopolitical tension adds to signs that OPEC and its partners are succeeding in draining a global glut.
Crude stockpiles in the US finally ticked below the closely watched five-year average mark for the first time since 2014.
Yet, record-high US crude production, coupled with concerns over a potential trade war with China that could thwart economic growth, is keeping the rally at bay.
West Texas Intermediate crude for May delivery on Friday rose US$1.58 to settle at US$65.88 a barrel on the New York Mercantile Exchange, up 5.7 percent for the week.
Brent for May settlement advanced US$1.54 to US$70.45 a barrel on the London-based ICE Futures Europe exchange, the highest level since late January. Brent futures are up 6.4 percent this week, the biggest weekly gain since July last year.
Any resumption of unilateral US sanctions against Iran could lead to a drop in the country’s oil exports by 250,000 to 500,000 barrels a day by the end of this year, oil and gas researcher FGE said last week in a note.
“I think we are at the top of the range,” Thomas Finlon, director of Energy Analytics Group LLC in Wellington, Florida, said in a telephone interview. “It’s reasonable to assume that US$70 represents a short-term ceiling for Brent.”
Oil market news:
‧ Gasoline futures on Friday rose 0.5 percent to US$2.0194 a gallon.
‧ Royal Dutch Shell PLC is selling its stake in Iraq’s West Qurna 1 field, abandoning the last of its oil assets in the country as it focuses on natural gas.
‧ Bank of America Merrill Lynch sees oil demand growth at 1.5 million barrels a day this year and 1.3 million a day next year, analysts wrote in a report.
‧ Lukoil PJSC is cautious about oil prices over the next decade, but promised to be generous to shareholders.
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