Oil continued to rebound from the year’s lows as US President Donald Trump threatened to ramp up sanctions against Iranian crude if a nuclear deal with the OPEC member isn’t reached.
West Texas Intermediate advanced 2.8% to settle near $64 a barrel, bringing its recovery from this year’s lowest closing price to more than 11%. Trump told an audience in Saudi Arabia that the US will exert maximum pressure on Iranian energy exports if an agreement isn’t reached. The US State Department said earlier that it’s sanctioning a network that helps ship Iranian crude oil to China.
Trump’s hawkish comments on Iran added to a rebound driven by softer-than-expected US inflation and lingering relief from easing trade tensions between America and China. Equity markets gained and the dollar weakened, making commodities priced in the currency more attractive.
“Broadly speaking, tariffs haven’t really impacted demand yet,” said Jon Byrne, an analyst at Strategas Securities. “It appears that the likelihood they never will has increased meaningfully as investors price out worst-case scenario risk with the rollback that we are seeing now.”
Saudi Arabia, OPEC+’s de facto leader, is the first stop in Trump’s trip to the Middle East. The Organization of the Petroleum Exporting Countries and its allies are expected to further boost output at a June 1 meeting, adding to concerns a glut will form later this year. The kingdom has pushed for the cartel to increase production to punish non-compliant members.
Still, market gauges are providing mixed signals. Nearby gasoline spreads are the strongest in months, as Americans opt for more road trips instead of flying. However, a key North Sea trading window has been inundated with offers for crude — a bearish signal.
Oil Prices
WTI for June delivery added 2.8% to settle at $63.67 a barrel in New York.
Brent for July settlement rose 2.6% to settle at $66.63 a barrel.
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