Investing.com - Oil prices continued to climb on Wednesday morning in Asia amid tensions in the Middle East.
Crude Oil WTI Futures for May delivery were trading at $63.73 a barrel in Asia at 11:00PM ET (03:00 GMT), up 0.30%. Brent Oil Futures for May delivery, traded in London, were also up 0.30% at $67.62 per barrel.
Saudi Arabia’s Crown Prince Mohammed bin Salman arrived in Washington on Tuesday for a state visit, raising speculation for an agenda to ramp up pressure on Iran. Following renewed criticism of the 2015 nuclear deal, the U.S. could reimpose sanctions on Iran, a concern that has lifted oil prices.
If the U.S. does reimpose sanctions on Iran, that would likely result in a 250,000 to 500,000 barrels per day (bpd) drop in its exports by year-end, according to energy consultancy FGE.
The nomination of Mike Pompeo as new U.S. Secretary of State also raises the likelihood of oil trade disruptions, given he fiercely opposed the 2015 pact as a member of Congress.
Further supporting prices is healthy demand for oil. The American Petroleum Institute said on Tuesday that U.S. crude stocks fell by 2.7 million barrels in the week ended March 16 to 425.3 million, a sign of healthy demand.
However, non-OPEC supply, led by the U.S., will grow by 1.8 million bpd this year, while demand will only grow by about 1.5 million bpd.
The U.S. has already surpassed top exporter Saudi Arabia in crude production and is expected to overtake Russia as the top producer by late 2018, with output of more than 11 million bpd.
The relentless surge in U.S. production is capping oil prices and undermining efforts from the Organization of the Petroleum Exporting Countries (OPEC) to prop up prices by withholding production. OPEC has been cutting output by around 1.2 million bpd since January 2017, which has inadvertently allowed the U.S. to take more market share.