The United States benchmark for crude oil, the West Texas Intermediate also gained in price, going up by 1.4% to trade at $70.00 per barrel. This comes after the June 22 agreement between the OPEC (Organization of the Petroleum Exporting Countries) and Russian Federation for increasing the production and reducing the prices.
OPEC and its allies are unlikely to agree to an official increase in crude output when they meet in Algeria this weekend, although pressure is mounting on top producers to prevent a spike in oil prices above $80 a barrel ahead of new US sanctions on Iran, OPEC sources told Reuters on Thursday.
According to Tamas Varga, a strategist with PVM Oil Associates, the question is not about the price movements being justified, rather, the current dictator of crude oil's price is the ability of producers to supply the amount of oil actually needed.
High gas prices can be an issue for voters, and Trump's attacks come just a couple of months ahead of United States midterms, where analysts say rising prices could hurt Republicans.
USA sanctions affecting Iran's oil exports come into force on November 4 and many buyers have already scaled back Iranian purchases. For the same period, analysts expected crude inventories to decrease by about 2.7 million barrels.
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"It's also political because the Saudis don't want to pump too much oil then the Iranians complain to OPEC that [Saudi Arabia] is taking [Iran's] market share".
Crude oil prices and energy-related exchange traded funds jumped as US oil inventories slip to a three-and-a-half year low on rising exports. The EIA said the United States likely now leads the world in crude oil production, moving past Saudi Arabia and Russian Federation.
Opec and oil producers outside the group, including Russian Federation, will meet on Sunday to revise oil production quotas.
Pressure on Iran has intensified since U.S. President Donald Trump pulled out of the diplomatic accord that Barack Obama negotiated to curtail Tehran's nuclear program. Saudi Arabia and the United Arab Emirates are the staunchest backers of the US within OPEC and are aligned politically against Iran in the Middle East. US light crude CLc1 was down 32 cents to settle at $70.80 a barrel after rising almost 2 percent on Wednesday.
"Spare capacity could fall below 1 percent of demand by year-end if Iranian exports fall below 1 million barrels per day, as now seems likely", Gammel said. The U.S. crude stockpiles were dropped due to the vision of loss of Iranian supply added to concern over the weak stability between production and consumption. Exports of refined products rose by 363,000 barrels a day last week to 5.22 million barrels a day.