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Oil rebounds as new Iran sanctions fuel more supply concerns

Commodities Jun 16, 2022 03:36PM ET
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© Reuters. FILE PHOTO: Yang Mei Hu oil products tanker owned by COSCO Shipping gets moored at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia June 13, 2022. REUTERS/Tatiana Meel
 
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By David Gaffen

NEW YORK (Reuters) -Oil prices rose on Thursday in topsy-turvy trading after the United States announced new sanctions on Iran, and as energy markets stayed focused on supply concerns that have sent prices soaring this year.

The market slipped earlier as interest rate hikes in the United States, Britain and Switzerland fed worries about global economic growth.

Brent crude futures settled at $119.81, up $1.30, or 1.1%, while West Texas Intermediate (WTI) crude futures ended up $2.27, or 2%, at $117.58.

After the early selloff, buyers jumped back into the market as most forecasters expect supply to remain tight for several months.

"A lot of it is just a supply issue and that has to be worked through," said Eli Tesfaye, senior market strategist at RJO Futures. "Right now there isn’t a slowdown in global demand so any selloff is going to be seen as an opportunity and that’s really what we saw today."

The International Energy Agency said it expects demand to rise further in 2023, growing by more than 2% to a record 101.6 million barrels per day. Optimism that China's oil demand will rebound as it eases COVID-19 restrictions is also supporting prices.

Analysts said prices got a boost from Washington's decision to impose sanctions on Chinese, Emirati and Iranian firms that help export Iran's petrochemicals.

In addition, Libya's oil output has collapsed to 100,000-150,000 bpd, a fraction of the 1.2 million bpd seen last year, and analysts remain concerned that country could have ongoing problems delivering oil amid unrest.

Prices slipped more than 2% overnight after the U.S. Federal Reserve raised its key interest rate by 0.75%, the biggest hike since 1994.

"Once you raise rates that high also and you know it’s going to happen for next month, a lot of retail customers have tough time trading once you start increasing their costs of trading," said Robert Yawger, director of energy futures at Mizuho in New York.

On Thursday, European stocks tumbled after a surprise rate hike from Swiss National Bank. [MKTS/GLOB] This was followed by a rate hike by the Bank of England.

Oil rebounds as new Iran sanctions fuel more supply concerns
 

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Comments (6)
Tebogo Phetabosigo
Tebogo Phetabosigo Jun 16, 2022 1:34PM ET
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They just messed up my bear trade on oil.
Tebogo Phetabosigo
Tebogo Phetabosigo Jun 16, 2022 1:33PM ET
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America is run by fools, fighting inflation and on the other hand pushing the buttons on sanctions on oil rich countries. What's the solution for high inflation here Dumb Dumber Dumbest?
Darren Hunt
Darren Hunt Jun 16, 2022 1:28PM ET
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fuel...more supply concerns no pun intended a Reuters?
Roger Miller
Roger Miller Jun 16, 2022 1:13PM ET
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More US sanctions driving up prices. Americans are being sacrificed for foreign policy, warranted or not, and America’s adversaries are taking advantage of it’s flailing leadership.
dar dar
dar dar Jun 16, 2022 1:07PM ET
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what causes you to conclude that it's a big lie I see it completely opposite but lucky when that at 160 right now
André Figueiras
André Figueiras Jun 16, 2022 5:19AM ET
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big lie......
sohan singh
sohan singh Jun 16, 2022 5:19AM ET
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yes
 
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