UNITED STATES (VOP TODAY NEWS) — Oil rose towards $ 73 a barrel on Friday, boosted by a threat of supply disruptions in the Middle East and heading towards a weekly rise.
US sanctions on Iran have further reduced the OPEC member’s crude exports in May, adding to restrictions on supplies stemming from an agreement led by the cartel.
Meanwhile, heightened tensions in the Middle East this week have raised concerns about additional supply disruptions.
Brent crude rose 15 cents to $ 72.77 a barrel by 0908 GMT. The global benchmark is up about 3 percent since the beginning of this week, and ended last week with stability and a decline in the previous week. West Texas Intermediate crude added 24 cents to $ 63.11.
The surge in tension was overshadowed by developments leading to a drop in oil prices this week, such as a sudden increase in US crude inventories.
The Saudi-led coalition carried out a few air strikes on Thursday in the Yemeni capital of Sanaa, which is controlled by fighters of the Houthi group allied to Iran, which has claimed responsibility for attacks on two Saudi oil pumping stations.
Earlier this week, the United States evacuated US staff from its embassy in Baghdad, while President Donald Trump ordered the deployment of an aircraft carrier group, B-52 bombers and Patriot missiles in the Middle East.
“When the tension is on the rise, and with the United States deploying a large military force, it could ignite even a minor tactical error on the part of Iran, the Middle East powder keg,” Steven Eins, director of trading and market strategy at SBI Asset Management, told Reuters via e-mail.
“There are many risks that threaten supplies as tensions reach that high.”
Markets are still waiting for a decision from the Organization of the Petroleum Exporting Countries (OPEC) and other producers on whether to continue supply cuts that have driven prices up more than 30 percent since the beginning of this year.
A meeting of an Opec-led ministerial committee in Saudi Arabia early next week will assess the commitment of member states to an oil production reduction deal and may issue a recommendation on the continuation or adjustment of the deal.
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