Oil pushes higher towards $57 as US Treasury flags sanctions on Iran

Brent crude was on track for a more than 2 percent gain on the week, its first significant weekly rise this year. (AP)

Oil prices jumped higher on Friday in response to the prospect of a fresh round of US sanctions against Iran after its test launch of a ballistic missile.

Brent crude futures were up 43 cents at $56.99 a barrel by 1515 GMT, having lost 24 cents in the previous session. Brent was on track for a more than 2 percent gain on the week, its first significant weekly rise this year.

Front month US West Texas Intermediate crude futures climbed 37 cents to $53.91, after closing 34 cents down on Thursday. The contract is up by nearly 1 percent on the week.

US President Donald Trump had warned on Twitter that “Iran is playing with fire” after its missile test, and the US Treasury said on Friday that it would announce new sanctions on Iran.

“The ‘trumperament’ of the new US president is being tested by Iran and soon maybe also by Russia and China,” said Olivier Jakob, managing director of consultancy PetroMatrix. “And that is adding some geopolitical support to crude oil.”

Volatility 

The sanctions announcement added to volatility in what had already been a day of choppy trading. Analysts said the market is torn between promised cuts from the Organization of the Petroleum Exporting Countries (OPEC) and fears over rising US shale oil production.

Earlier in the afternoon the oil contracts gave up gains and briefly turned negative on US jobs data.

Hans van Cleef, senior energy economist with ABN Amro, said there could be more choppy trading after Baker Hughes releases US rig count data later in the day, giving an indication on future US production.

The prospect of more oil output from Nigeria and other non-OPEC producers such as Brazil also looms.

“Record speculative length threatens to trigger a sharp price fall as unease builds,” Commerzbank said in a note.
 

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Last Update: Wednesday, 20 May 2020 KSA 09:48 - GMT 06:48
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