Oil prices climbed early Thursday, maintaining four-year highs, after a U.S. official said the sale of domestic oil reserves wouldn’t be used to undercut a rally in crude, underpinned by anticipation of supply disruptions caused by the renewal of sanctions on Iran.
Meanwhile, Saudi Arabia, one of the world’s largest producers of oil and a key member of the Organization of the Petroleum Exporting Countries, is leading a push to add additional oil to global markets in the next few months to offset those U.S. sanctions set to take hold in Tehran in early November, according to a Reuters report.
November West Texas crude CLX8, +0.94% rose 78 cents, or 1.1%, to reach $72.37 a barrel on the New York Mercantile Exchange, after prices shed 1% Wednesday.
Global benchmark November Brent LCOX8, +0.44% rose 65 cents, or 0.8%, at $81.44 a barrel on the ICE Futures Europe exchange, erasing a decline of a similar magnitude in the day prior.
According to Reuters, Saudi Arabia and other producers have recently discussed ramping up daily crude output by about 500,000 barrels a day among OPEC and non-OPEC producers.
Market participants have worried that Trump may turn to selling oil from the U.S.’s Strategic Petroleum Reserves, or SPR, to cap further gains in oil prices, which he has described as a negative for the economy and has pressed Saudi officials to keep prices lower.
However, U.S. Energy Secretary Rick Perry has said there are no plans for the U.S. to release oil from its Strategic Petroleum Reserves, according to Warren Patterson, commodities strategist at ING Bank.
On Wednesday, President Donald Trump Wednesday at a news conference added support to a recent uptrend in crude futures, urging allies at a United Nations Security Council meeting that he chaired to adhere to sanctions on Iranian crude exports.
Crude prices have been boosted in part by Trump’s decision to pull out of a 2015 Iran nuclear accord and renew sanctions aimed at sharply curtailing the major producer’s exports. Trump, at the same time, has chided OPEC over rising oil prices. Last week, he tweeted that producers must act to “get prices down now!”
But over the weekend in Algiers, OPEC members and nonmember crude producers, known as the Joint OPEC-non-OPEC Ministerial Monitoring Committee, failed to deliver a formal plan to boost output to offset an estimated 2 million barrels a day of oil that estimated to likely be lost due to the Iranian sanctions.
Wednesday’s decline for crude followed reports from the Energy Information Administration which showed that domestic crude supplies rose by 1.9 million barrels for the week ended Sept. 21. The EIA had reported declines in each of the previous five weeks.
The increase defied expectations for a fall of 2.2 million barrels from analysts surveyed by S&P Global Platts, but the rise was smaller than the climb of 2.9 million barrels reported by the American Petroleum Institute on Tuesday, according to sources.
Oil prices saw little reaction to the Federal Reserve’s decision Wednesday to raise its benchmark lending rates to a range between 2% and 2.25%, which had been widely expected.
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