Supply Worries Lift Oil Prices as U.S. Renews Sanctions on Iran

Brent crude futures were up 20 cents, or 0.3 percent, at $72.48 barrel by 0644 GMT, following a decline of more than 3 percent on Wednesday.

U.S. West Texas Intermediate (WTI) crude futures had gained 10 cents, or 0.2 percent, to $67.04 a barrel, after dropping 3.22 percent the previous session.

“The market is supported by concerns the sanctions on Iran are going to reduce Iranian supply,” said Tony Nunan, oil risk manager at Mitsubishi in Tokyo.

“The geopolitical risk from Iran is keeping a floor under the price,” he said.

The U.S. reimposed sanctions on some industries on Tuesday against Iran, third-biggest producer in the Organization of the Petroleum Exporting Countries (OPEC).

The renewed sanctions won’t directly target Iranian oil until November, although U.S. President Donald Trump has said he wants as many countries as possible to cut their imports of Iranian crude to zero.

China is imposing tariffs of 25 percent on a further $16 billion in imports from the United States, hitting trade goods from fuel and steel products to autos and medical equipment.

The ongoing trade war is rattling global markets and investors fear any slowdown in the world’s two largest economies would slash demand for commodities.

China’s crude imports recovered slightly in July after two months of decline, but were still among the lowest this year due to a drop-off in demand from smaller independent refineries.

China, the world’s top importer of crude, took 8.48 million barrels per day (bpd) last month, up from 8.18 million bpd a year earlier and June’s 8.36 million bpd, customs data showed.

The U.S. Energy Information Administration, meanwhile, reported that crude inventories fell 1.4 million barrels in the latest week, less than half the 3.3 million-barrel draw analysts had expected. [EIA/S]

Gasoline stocks notched a surprise rise of 2.9 million barrels, not the 1.7 million-barrel drop analysts had predicted in a Reuters poll.

In another sign that price gains might be capped, Iraq cut the official selling price for September cargoes of Basra Light crude for its Asian customers on Thursday.