Oil rises as US-Iran tensions escalate

Bloomberg

Brent crude rose as tensions between the US and OPEC member Iran escalated, stoking concern that the spat will lead to supply disruptions.
The global benchmark climbed as much as 2 percent as US President Donald Trump said there will be unspecified “consequences” if the Islamic Republic threatens the US, after President Hassan Rouhani warned Trump not to block Iran’s oil exports.
Futures in New York advanced as much as 1.5 percent in New York, before paring gains as a report by data-provider Genscape Inc is said to show a build in supplies at Cushing, Oklahoma.
“We’re watching the geopolitical risk premium get inflated as we continue to be battered by headline risk, or Twitter risk,” said John Kilduff, a partner at New York-based hedge fund Again Capital LLC. “The escalation and the rhetoric gets everybody concerned about what might happen between the US and Iran, and oil supplies in the Gulf.”
Brent has dropped about 7.5 percent so far this month amid concerns that ongoing trade conflicts between the US and China will damage economic activity and hurt demand. That’s offsetting a range of supply risks, from Libya to Venezuela and the looming US sanctions on Iran.
“You have a combination of factors for the more constructive mood on the market, including an escalation of rhetoric between the US and Iran that inflates the geopolitical risk,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London.
He added that the strike at Total’s North Sea facilities “helps” contribute to the bullish sentiment.
Brent for September settlement added 42 cents to $73.49 a barrel at 10:39 am on the London-based ICE
Futures Europe exchange.