Oil prices rose on Wednesday, lifted by concerns that the United States may re-impose sanctions on major exporter Iran, although soaring U.S. supplies capped gains.
Brent crude oil futures were at $73.25 per barrel at 0020 GMT, up 12 cents, or 0.2 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were up 20 cents, or 0.3 percent, at $67.45 per barrel.
Iran re-emerged as a major oil exporter in January 2016 when international sanctions against Tehran were lifted in return for curbs on Iran’s nuclear programme.
Iran’s oil exports hit 2.6 million barrels per day (bpd) in April, the Oil Ministry’s news agency SHANA reported on Tuesday, a record since the lifting of sanctions, with China and India buying more than half of Iran’s oil.
The United States, however, has expressed doubts over Iran’s sincerity in implementing those curbs and President Donald Trump has threatened to re-impose sanctions.
Trump will decide by May 12 whether to restore U.S. sanctions on Tehran, which would likely result in a reduction of its oil exports.
“As May 12 Iran nuclear deadline nears … geopolitical developments will continue to drive (oil market) sentiment,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore.
Despite this generally bullish oil market sentiment, Innes said high U.S. oil supplies were capping prices.
Crude inventories rose by 3.4 million barrels to 432.575 million in the week to March 27, according to a report by the American Petroleum Institute (API) on Tuesday.
The rising inventories are in part a result of soaring U.S. production, which has jumped by more than a quarter in the last two years to 10.6 million barrels per day (bpd), making the United States the world’s number two crude oil producer behind only Russia, with 11 million bpd.