Geopolitics continue to drive oil up

Crude prices firmed on Friday as looming sanctions against Iran, the continuing economic crisis in Venezuela and strong demand continued to support prices.

New York-traded West Texas Intermediate crude futures gained 15 cents, or about 0.2%, to $71.64 a barrel by 4:21AM ET (8:21GMT).

Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., traded up 42 cents, or roughly 0.5%, to $79.72 a barrel.

Both barrels hit their highest price since 2014 on Thursday, while Brent managed to briefly surpass the $80, only to pare gains by settlement. While making another move higher on Friday, U.S. crude and Brent were on track for weekly gains of around 1.3% and 3.2%, respectively.

Crude has seen upward momentum since President Donald Trump announced on May 8 that the U.S. was pulling out of the Iranian nuclear deal and re-imposing sanctions.

Market participants widely expect the move to lead to tighter global oil supplies as they make it more difficult for Iran to export oil.

Iran, which is a major Middle East oil producer and member of the Organization of the Petroleum Exporting Countries (<a href=’https://staging.theenergyyear.com/companies-institutions/<a href=’http://staging.theenergyyear.com/companies-institutions/opec/’>opec/’>OPEC), resumed its role as a major oil exporter in January 2016 when international sanctions against Tehran were lifted in return for curbs on Iran’s nuclear program.

Also increasing concerns over supply, unrest was building in Venezuela ahead of presidential elections on Sunday that nations including the U.S., European Union, Mexico, Brazil or Colombia have labeled as “illegitimate”.

Production in Venezuela plunged to 1.5 million barrels last month, its lowest level in decades due to its ongoing economic crisis.

On the domestic front, oil prices were also supported by bullish U.S. crude inventory data showing both crude and gasoline supplies fell more than expected last week, according to the Energy Information Administration (EIA) on Wednesday.

Inventories of U.S. crude fell by 1.404 million barrels for the week ended May 11, beating expectations for a draw of just 0.763 million barrels, while gasoline inventories fell by 3.790 million barrels, beating expectations for a fall of 1.421 million barrels.

Later on Friday, the weekly installment of drilling activity from Baker Hughes will provide investors with fresh insight into U.S. oil production and demand.

Data last week showed the number of U.S. oil rigs rose for the sixth week in a row, pointing to a possible expansion in domestic output and fueling concerns that increased production stateside could eventually derail OPEC-led efforts to curb output and balance markets.

In other energy trading, gasoline futures rose 0.1% to $2.2520 a gallon by 4:22AM ET (8:22GMT), while heating oil advanced 0.3% to $2.2886 a gallon.

Meanwhile, natural gas futures fell 0.4% to $2.848 per million British thermal units ahead of weekly inventories.