Oil prices hit a 3 year high on Thursday, with ongoing protests in major producer Iran adding a geopolitical risk premium to the market.
West Texas Intermediate futures on the New York Mercantile Exchange were trading up 0.2% at $61.77 a barrel. Brent crude, the global oil benchmark, eased 0.1% to $67.79 a barrel on London's ICE Futures exchange, having earlier peaked at $68.27, the highest level since May 2015.
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Antigovernment protests in Iran over the past week have been partly driven by economic grievances after the lifting of international sanctions two-years ago did not generate the expected windfall.
Some foreign leaders including U.S. President Donald Trump have been critical of how Iran has used money on foreign conflicts, another focal point of protester anger.
"The market has taken a strong cue from the increased level of back-and-forth between Iran and the U.S. in response to widespread pro-reform protests in the third-biggest OPEC crude producer over the last week," said consultancy JBC Energy in a note.
"The potential reinstatement of U.S. sanctions targeting the Iranian oil industry remains an issue."
The U.S. is due to review temporary waivers on sanctions against Iran later this month.
For now, Iran's oil exports haven't been disrupted.
Iranian daily crude oil loadings have remained consistent, in line with the volumes exported since mid-December, according to Kpler, a tanker tracking firm.
Analysts also pointed to the deteriorating economic outlooks in other large producers including Venezuela.
"The number one issue is the geopolitical situation...not only Iran, because we also have an escalating situation in Venezuela where they haven't been able to pay their debt recently," said Torbjorn Kjus, oil analyst at Norway-based DNB Bank.
Mr. Kjus said there was a risk that Venezuela could "collapse" in 2018, which could entail several different scenarios, from a coup to a general strike, or a slow choking of the economy. Venezuelan production is falling by around 50,000 barrels a month, he added.
A cold snap in the U.S., triggering historically low temperatures, has also supported higher prices as demand for fuel for heating has risen plus there are worries the weather could cause supply disruptions.
Nymex reformulated gasoline blendstock--the benchmark gasoline contract--rose 0.1% to $1.80 a gallon. ICE gas oil changed hands at $610.00 a metric ton, up $3.25 from the previous settlement.
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(END) Dow Jones Newswires
January 04, 2018 06:28 ET (11:28 GMT)