On Wednesday U.S. crude oil gained 3.2 percent, its highest since 2014 after the U.S. Energy information Administration reported that there was a decline of 9.9 million barrels of crude supplies for the week ended June 22.
Oils rally was also fuelled by supply disruptions in Syncrude in Canada which is expected to last through to July as they undergo repairs, locking in 350,000 barrels per day.
There are also concerns by investors of continued crude oil disruptions in Libya, with the rebels and the government locked in a power struggle over the country’s oil exports.
Iranian Oil Sanctions Deadline
Also adding to the surge in U.S. crude which gained $2.45 a barrel was the announcement by the U.S. State Department that countries will face heavy sanctions if they do not stop importing Iranian crude oil by Nov. 4.
The Trump administration also said that under President Barack Obama administration Iranian oil buyers were given the leeway to gradually phase out their purchases, this will not be allowed.
The Eurasia Group, a risk consultancy corporation said that the sanctions would impact 700,000 barrels per day from the market, up from their earlier predictions of 300,000 – 500,000 barrels per day.
Iranian researcher at Eurasia Group, Henry Rome said according to reports said that following the Trump administrations forceful attitude, Japan and South Korea are likely to quickly zero out imports.
He also believes that countries like China, Turkey and India are likely to stall on making any significant cuts on crude oil imports by November deadline.
At the close of trading on Tuesday U.S. light crude gained 3.2 percent up $2.23 at $72.76 a barrel.
The global benchmark, Brent crude oil gained 1.9 percent up $1.41 a barrel to $77.72.
Stockpiles of gasoline increased by 1.2 million barrels for the week according to the EIA.
A survey forecast by the S&P Global Platts have increases of 160,000 barrels for gasoline and for distillate stocks an increase of 500,000 barrels.
How can you actually use this?
Well, according to a statement made by Managing director at TJM Institutional Services, Jim Iuorio who said that following the meeting of OPEC and Russia on Friday where an agreement was reached to ramp up oil output because of potential disruptions in Iran’s supplies. He thinks they are underestimating the amount they plan to increase.