However, experts are of opinion that the market may get some clarity and things may ease out a bit after a review meeting in June by Organisation of Petroleum Exporting Countries (Opec) and non-Opec in which they may take the decision whether to continue with cut in oil production as was pledged earlier or pump out more to make up for any shortage.
While all eyes are riveted on Iran and the Middle East, the pace of Chinese oil demand growth could be the most underappreciated story in oil markets right now, Bloomberg Opinion columnist David Fickling writes.
"WTI is expected to be relatively weaker versus other benchmarks on the back of growing Cushing stockpiles and increasing domestic production in the US", said Virendra Chauhan, an analyst at industry consultant Energy Aspects Ltd., referring to the largest American storage hub. According to Goldman, global oil demand growth in the first quarter of 2018 is likely to have seen the strongest yearly growth since the fourth quarter of 2010. "The loss of Iranian barrels could tighten supplies of Middle Eastern medium-sour crudes and be supportive of Dubai oil, as traders watch for any response from other Gulf producers".
So far this year, China has lived up to these expectations.
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China, which is the world's biggest importer of oil, saw refinery runs rise 12 per cent in April compared to the same time previous year to about 12m barrels of oil per day.
OPEC figures published on Monday showed that oil inventories in OECD industrialised nations in March fell to 9 million barrels above the five-year average, down from 340 million barrels above the average in January 2017.
The data poses worries that near-record high refinery runs may be short-lived. Steady refining margins and backlog cargoes to some independent refiners contributed to the record import volumes. The coming US sanctions pushed up oil prices last week after President Donald Trump withdrew the United States from the nuclear deal.
Still, "we don't expect China to reduce its imports of crude from Iran given their long-term signed contracts and the ability to pay in yuan", said Abhishek Deshpande, the head of oil market research & strategy at J. P. Morgan.