Oil Rises Amid Middle East Tensions, Shrinking Crude Stockpiles

"The message implied by Brent's greater premium to WTI has been for USA producers to ship more crude overseas to offset OPEC's voluntary supply cuts and potential supply decreases elsewhere", Oil Futures Editor Geoffrey Craig said in the emailed commentary.

In July 2008, Brent crude hit $145.61 a barrel, its record high.

Last week, the API reported a draw of 1.047 million barrels of crude oil.

Oil held losses below $68/bbl after French President Emmanuel Macron called for a new Iran nuclear deal to keep the US on board, raising speculation sanctions on the OPEC producer may be averted.

Certain market demand elements are also helping.

Overall, the environment for oil is bullish.

Admittedly, the rise in fuel costs will eventually weigh on the disposable income of consumers and the profits of non-oil businesses.

Global oil prices hit their highest levels since late 2014 on Tuesday, pushed up by expectations of renewed USA sanctions against Iran and as Opec continues withholding supplies amid strong demand.

It won't be necessary to extend historic supply limits if oil prices keep climbing, Iranian Oil Minister Bijan Namdar Zanganeh said, according to the ministry's Shana news service.

The potential of renewed US.sanctions against Iran is also pushing prices higher.

Set up for new oil crash? "For example, in Russian Federation, the Energy Ministry does not have the authority to instruct companies how much oil they need to extract, but the president can turn to them with an offer to conclude an agreement, and they meet halfway", Igor Yushkov said in an interview with Pravda.Ru.

Oil has rallied this month as the Organization of Petroleum Exporting Countries and its allies conclude they have all but wiped out a global crude surplus, while Iran signaled the group can end output cuts if prices continue to rise.

At face value, it appears that there is not much Trump can do about high oil prices.

In 2008, when oil almost hit $150 per barrel, he world suffered a financial crisis throwing global economies in recession.

UOB Kay Hian analyst Kong Ho Meng explained that contracts from national oil company Petroliam Nasional Bhd (Petronas) is a better indicator compared to oil price level.

"Oil prices are artificially Very High!"

Higher oil prices could help bolster the recovering oil industry while not stifling demand. The criticism from Donald Trump, who tweeted that the OPEC was artificially inflating the prices, will not change the situation. "That is a big concern..." The only thing that is stopping the oil prices shooting through the roof is the fact that America's oil production has been rising. This would further tighten global supplies.

  • Leroy Wright