Oil Rises to New Three-Year Highs

Oil Rises to New Three-Year Highs

"The initiation of further sanctions on Russian Federation and the withdrawal from the Iran nuclear deal are additional elements that may be a source of uncertainty in the future, impacting the USA economy and global trade", the report read. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.5% at $71.33 a barrel. USA crude oil has already gained 17% year to date and 48% from a year ago.

Since the accord was reached at the end of 2016, oil prices have climbed to their highest in almost four years to exceed $77 a barrel, up from $30 in early 2016.

Elsewhere, supply concerns have been mounting over the last week after President Donald Trump the United States pulled out of the Iran nuclear deal - a move that reimposes sanctions on Iranian barrels.

In an executive memorandum issued to the Secretary of State, Secretary of Treasury and Secretary of Energy, the president said that after considering several factors such as the level of supply in the global market and in the US he chose to hit Iran in the pocketbook.

The White House has said it will impose sanctions on companies that continue to purchase Iranian oil but allow them six months to wind down those contracts.

Saudi Arabia, the largest crude oil exporter in the world, has said it will help fill the gap if US sanctions on Iranian oil importers creates shortages, but it may not be willing to act alone.

The cartel's projected demand growth for 2018 is now 1.65 million barrels a day, also up by 20,000 since last month's report.

Oil climbed to a three-year high above $79 a barrel in London on heightened political risks in parts of the Middle East following unrest in Gaza and the return of sanctions against Iran. American measures could cut the Persian Gulf nation's crude exports, and traders are watching whether OPEC and its allies will end their agreement to curb supply and increase production instead to fill in the gap.

Shortly after Trump's pullout announcement, a number of reports by Bank of America Corp suggested that the Iran-related move coupled with a dip in Venezuela's oil production will lay a heavy burden on global crude oil markets.

U.S. shale oil production is expected to rise by about 145,000 bpd.to a record 7.18 million bpd.in June, the U.S. Energy Information Administration said on Monday. "Saudi Arabia appears to be focusing more on pushing up crude higher rather than restoring the balance in oil's supply and demand, and that is underpinning prices".

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