Skip to main content

Energy and Resources Oil prices rise more than 1 per cent after Iran seizes British tanker

Oil prices rose more than 1 per cent on Monday, as investors worried about possible supply disruptions in the energy-rich Middle East after Iran’s seizure of a British tanker last week.

Brent crude futures climbed 79 cents, or 1.3 per cent, to settle at $63.26 a barrel.

West Texas Intermediate (WTI) crude settled up 59 cents, or 1.1 per cent, at $56.22 a barrel.

Story continues below advertisement

Capping gains, force majeure was lifted on loadings of crude at Libya’s Sharara oil field, the country’s largest, whose closure since Friday had caused an output loss of about 290,000 barrels per day (bpd).

Last week, WTI fell over 7 per cent and Brent lost more than 6 per cent, weighed down by economic worries and the return of U.S. production in the Gulf of Mexico after a hurricane.

“Some of the selling pressure from demand concerns seems to have evaporated this week,” said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut. “The fears about geopolitics seem to have halted some of that selling pressure.”

Iran’s Revolutionary Guards said on Friday they had captured a British-flagged oil tanker in the Gulf in response to Britain’s seizure of an Iranian tanker earlier this month.

The move stoked fears of potential supply disruptions in the Strait of Hormuz at the mouth of the Gulf, through which flows about one-fifth of the world’s oil supplies, but no major escalation with Britain or the United States appears imminent.

“In the cat-and-mouse game that Iran is playing with the U.S., it is taking calculated risks,” Harry Tchilinguirian, global oil strategist at BNP Paribas in London, told the Reuters Global Oil Forum. “So far the U.S. is not taking the bait.”

Last week, data showed shipments of crude from Saudi Arabia, the world’s top oil exporter, fell to a 1-1/2-year low in May.

Story continues below advertisement

Speculative money is flowing back into oil in response to the escalating dispute between Iran, the United States and other Western nations, along with signs of falling supply. In early May, new, tighter U.S. sanctions on Iran took effect.

Hedge funds and other money managers raised their combined futures and options positions on U.S. crude for a second week and increased their positions in Brent crude as well, according to data from the U.S. Commodity Futures Trading Commission and the Intercontinental Exchange.

Goldman Sachs on Sunday lowered its forecast of growth in oil demand for 2019 to 1.275 million bpd, citing disappointing global economic activity.

Report an error
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter