Oil recovered some ground on Wednesday after the previous day’s slide, helped by concerns about possible renewed U.S. sanctions on major exporter Iran although price gains were capped by rising U.S. supply.
Brent crude oil futures were up 31 cents at $ 73.44 a barrel by 0900 GMT, after falling nearly 3 percent on Tuesday to its lowest in two weeks.
U.S. West Texas Intermediate (WTI) crude futures rose 50 cents to $ 67.75 per barrel.
“Geopolitical noise remains loud and in part pushed oil prices towards $ 75 per barrel,” said Norbert Ruecker, head of commodity and macro strategy at Julius Baer. “The elevated uncertainty suggests volatile but range-bound oil prices going forward.”
Iran, a member of the Organization of the Petroleum Exporting Countries, re-emerged as a major oil exporter in January 2016 when some international sanctions against Tehran were lifted in return for curbs on Iran’s nuclear programme.
The United States has questioned Iran’s sincerity in implementing the nuclear curbs and President Donald Trump has threatened to reimpose sanctions if adjustments are not made to the agreement.
Iran’s oil exports hit 2.6 million barrels per day (bpd) in April, according to the Oil Ministry, a record since the lifting of sanctions. China and India bought more than half of the oil.
“The expectation that the U.S. will leave the sanctions waivers is leading Iran to sell as much as it can,” Petromatrix strategist Olivier Jakob said.
Trump will decide by May 12 whether to restore U.S. sanctions on Iran, which would likely reduce its oil exports.
“If Trump abandons the deal, he risks a spike in global oil prices,” said Ole Hansen, head of commodity strategy at Saxo Bank, adding that re-introducing U.S. sanctions could remove 300,000-500,000 bpd of Iranian oil from global supplies.
However, the rising value of the dollar since mid-April and soaring U.S. supplies has helped check further oil price gains, traders said.
U.S. crude inventories rose by 3.4 million barrels to 432.575 million in the week to March 27, according to a report by the American Petroleum Institute on Tuesday.
Rising inventories are partly due to soaring U.S. production, which jumped by a quarter in the last two years to 10.6 million bpd.
The United States has now overtaken Saudi Arabia to become world’s second biggest crude producer after Russia.