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Oil Makes More Gains on US Sanction Reminders

June 28, 2018 at 15:40 by Matt Jackson

WTI crude has reached its highest level since 2015, as oil prices powered ahead following the Energy Information Administration report showed that US crude supplies saw their largest decline of the year. Brent also made gains, albeit not as significant as those made by WTI, but still has some way to go to reach previous highs of $80 per barrel. Today’s gains, as well as yesterday’s significant gains, have also come after the USA reiterated its intentions to penalize those countries that continue to buy oil from Iran.

A US State Department official said on Tuesday that they expect countries to reduce their purchases of oil from Iran to 0 by November 4. A lot of officials and oil importers had expected to be given more time to reduce their dependence on Iranian oil supplies, but this latest announcement suggests a tightening of Trump’s ambition to isolate Tehran. The official said that the Treasury Department does not intend to issue any waivers, which means that there will be no exceptions to these sanctions. The market immediately reacted, especially as the news is only likely to exacerbate the ongoing escalation of a trade dispute between the USA and various countries around the world.

The news of Iranian sanctions also came on the back of the Energy Information Administration‘s weekly report, which showed that US oil supply had seen its largest decline so far this year. There had been a reduction of 9.9 million barrels of oil, which was considerably more than the forecasted drop of just over 2 million barrels.

This combination of news stories has seen the price of Brent and West Texas oils merge closer to one another, with WTI crude rising 1.03% to $73.51 a barrel. Brent crude saw comparatively moderate gains, with price increasing just 0.14% to $77.57 at 16:15 GMT.

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