Crude rose to a five-month high on Tuesday, as Washington’s decision to end sanctions waivers on Iranian oil imports buoyed oil markets for a second day.
Brent, the international oil benchmark, rose 0.8 per cent to $74.64 in early European trading, adding to gains on Monday to reach its highest level since early November. West Texas Intermediate, the US marker, increased 0.9 per cent to $66.13.
The moves came after the Trump administration announced the end of waivers from US sanctions granted to India, China, Japan, South Korea and Turkey.
Goldman Sachs said the timing of the sanctions tightening was “much more sudden” than expected, but it played down the longer-term impact on the market.
“While we acknowledge the near-term upside price risks, we reiterate our fundamentally derived Brent price trading range of $70-75 per barrel for the second quarter of 2019,” Goldman analysts said in a note
Oil prices jumped despite the White House insisting that it had worked with Saudi Arabia and the United Arab Emirates to ensure sufficient supply to offset the loss of Iranian exports.
The bank highlighted the relatively small move in prices given the loss of up to 1.3m barrels a day of Iranian exports. This reflects “a much greater confidence in available spare capacity,” Goldman said.
Oil prices have risen nearly 40 per cent this year, as the Opec cartel of oil producers cut production, and sanctions on Iran and Venezuela tightened supply in global markets.
Energy stocks across major Asian bourses posted strong gains, while the Stoxx 600 index of European oil and gas groups jumped 1.6 per cent.
In currency markets, the Norwegian krone and Canadian dollar both rose against the US dollar as currencies of oil-exporting countries gained.
