Investing.com - WTI crude oil prices settled lower on Thursday but remained on track for a weekly gain amid expectations U.S. sanctions on Iran would cut global crude supplies, extending a rally in oil prices.
On the New York Mercantile Exchange crude futures for June delivery settle unchanged at $71.49 a barrel, while on London's Intercontinental Exchange, Brent rose 9 cents to trade at $79.36 a barrel. Brent rose above $80 a barrel earlier in the session for the first time since November 2014.
Ahead of the re-imposition of U.S. sanctions on Iran – expected to take place in two separate waves – on Aug 6. and Nov. 5, market participants continued to expect the sanctions would cut Iran's oil exports enough to suppress global crude supplies despite a lack of support from the EU and China.
The European Commission reportedly is working on a law that bans European companies and courts from complying with U.S. sanctions against Iran, Reuters said.
The reluctance from the United States’ main trading allies has spark debate on whether the sanctions would be effective enough to disrupt global oil supplies as OPEC recently said it was willing to step in and plug the potential gap in supply to keep oil markets stable.
Yet, some analysts have suggested the sanctions on Iranian oil customers would likely have an immediate impact of less than 200,000 barrels per day, and block less than 500,000 barrels after six months.
On the domestic front, oil prices were also supported by bullish U.S. crude inventory data showing both crude and gasoline supplies fell more than expected last week, according to the Energy Information Administration (EIA) on Wednesday.
Inventories of U.S. crude fell by 1.404 million barrels for the week ended May 11, beating expectations for a draw of just 0.763 million barrels, while gasoline inventories fell by 3.790 million barrels, beating expectations for a fall of 1.421 million barrels.