Crude has rallied this month on concern that U.S. President Donald Trump’s decision to quit an international accord with Iran and reimpose sanctions will strain global supplies just as markets are already tightening. The glut that had weighed on prices for the past three years has finally been eliminated, thanks to strong demand and output cuts by other producers in OPEC, the International Energy Agency said on Wednesday.
Oil’s advance to $80 brings it to the level that OPEC’s biggest member, Saudi Arabia, is reportedly seeking to cover the cost of weighty domestic spending commitments. However, the IEA -- which advises oil-consuming nations -- has warned that prices are high enough to hurt consumption, and trimmed its forecasts for demand growth.
“Supply concerns are top of mind after the U.S. left the Iran nuclear deal,” said Norbert Ruecker, head of macro and commodity research at Julius Baer Group Ltd. in Zurich. “The geopolitical noise and escalation fears are here to stay.”
Brent for July settlement rose as much as 90 cents to $80.18 a barrel on the London-based ICE Futures Europe exchange, the highest since November 2014, and traded for $79.79 at 11:13 a.m. local time. The global benchmark crude traded at a $7.68 premium to West Texas Intermediate crude for delivery the same month.
WTI’s June contract traded at $72.06 a barrel on the New York Mercantile Exchange, up 57 cents, after climbing 18 cents on Wednesday. Total volume traded was 41% above the 100- day average.
Futures for September delivery on the Shanghai International Energy Exchange gained 1.9% to 481.9 yuan a barrel, rising for a third day.
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