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Oil Extends Gain as US Sanctions China Refinery for Iran Trade - BLOOMBERG
(Bloomberg) -- Oil climbed a third day after the US sanctioned a Chinese refinery for the first time, in a marked step-up of measures to curb crude supply from Iran.
Global benchmark Brent pared earlier gains as the dollar rallied but was still above $72 a barrel, and set for its biggest weekly advance since early January. West Texas Intermediate was below $69. The US penalized a small Chinese oil refinery and its chief executive officer for allegedly buying Iranian oil, the Trump administration’s first intervention in the Asian nation’s refining system. It also sanctioned a terminal operator.
The sanctions are “a clear risk escalation for physical flows for the region, though today’s moves stopped short of a full physical impediment to the illicit Iranian oil trade into China,” RBC Capital Markets LLC analysts including Brian Leisen wrote in a note. “While the physical implications are minimal, we think it reasonable that risk premium here is taken more seriously.”
US data fueled optimism over consumption in the largest oil consumer this week. However, advances have been limited by bearish headwinds, including an escalating global trade war and the specter of more OPEC+ supply from next month.
Several of the cartel’s members have pledged additional cutbacks to compensate for exceeding quotas. The reductions by countries including Kazakhstan, Iraq and Russia should — in theory — offset the plans to revive halted output through to the end of next year, according to a statement on OPEC’s website.
