Oil surges to a fresh high as Middle East tensions spark violence

Oil surges to a fresh high as Middle East tensions spark violence

But analysts say Wednesday's advances could be just kneejerk reactions as the market needs more time to fully digest the impact of the US's unilateral crackdown on Iran.

Brent crude, the global oil benchmark, was up 0.4% to trade at $77.66 per barrel.

They expect West Texas Intermediate, the most commonly cited U.S. contract, to trade $6 below the price of Brent in 2019. Singapore-listed O&G-related stocks also mostly closed in positive territory.

BP has little involvement in Iran, but it has a 50-50 joint venture with the Iranian state oil company to operate the Rhum gas field, which supplies 5% of the UK's gas.

Barclays does not see a significant impact on the oil market either. He noted that such triggers tend to induce larger gains in the higher leveraged counters.

If oil prices continue higher past $70, many of these ETFs will nearly certainly follow suit.

For a start, President Trump's announcement has put hundreds of barrels of crude supplies at risk. He said those problems include enabling the Islamic Revolutionary Guard Corps to further penetrate Iran's economy and giving Tehran more currency to support "nefarious" activities overseas.

The United States plans to reintroduce sanctions against Iran, which pumps about 4 percent of the world's oil, after abandoning a deal reached in late 2015 that limited Tehran's nuclear ambitions in exchange for the removal of US and European sanctions.

The accord trades billions in sanctions relief in exchange for commitments from Iran to get rid of its enriched uranium stockpiles and decommission the vast majority of equipment which could be used to make more.

Trump's decision about the Iran deal isn't the only factor driving up oil and gasoline prices, however.

Primary sanctions restrict United States companies from doing business with Iran.

Saudi Arabia, the world's top oil exporter, will supply full contractual volumes of crude to two refiners in Asia in June, two sources with knowledge of the matter said on Thursday.

The Organization of the Petroleum Exporting Countries, Russia and several other producers began to reduce oil output in January 2017 in an attempt to erase a supply glut and prop up prices.

UOB Kay Hian equity analyst Foo Zhi Wei countered however, that the global community may try to salvage the Iran nuclear deal.

Some analysts believe that because the sanctions are less coordinated this time around, the hit to Iranian exports would only amount to a few hundred thousand barrels per day.

Iran produced about 3.8 million barrels of oil per day in April, according to the latest S&P Global Platts OPEC survey.

All eyes are therefore on Opec's next move, though Mr Tonhaugen warned that the cartel is not expected to ramp up output or exports in the near future. At least some of that oil will now be pulled from the market - at a time when oil prices are already rising because of production cuts by OPEC and Russian Federation as well as instability in Venezuela.

But Ms Jaipuriyar of S&P Global Platts pointed out that the goal of that agreement is to lift oil prices to a level that will bring investments back to the conventional O&G sector.

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