The oil price has risen to above $74 per barrel Wednesday, after the latest American Petroleum Institute report showed a sharp drop in the level of crude oil stocks held in the US. Incoming US sanctions against Iran also continue to add upward pressure on oil prices, amid fears of future tighter supply.
By around 1620 BST, the price of Brent crude was 2.34% higher at $74.33 per barrel. The price of US WTI crude, meanwhile, increased 2.54% to $67.51.
US oil stocks drop
The API’s latest report showed a draw on US crude oil inventories of 5.8 million barrels, in the week ended August 17th. That was a much larger draw than analysts had expected and also follows an increase of 6.8 million barrels during the prior week.
That decline in US crude oil inventories added upward pressure to the price of the valuable commodity, at a time when a variety of other details are also causing price to move higher.
A weaker US dollar is also helping to support the oil price, as when the value of the dollar weakens, it becomes less expensive to buy in foreign currencies.
And, even though the US said earlier this week it planned to release some 11 million barrels of crude from its Strategic Petroleum Reserve, to be sold ahead of all the Iran sanctions being put in place to help mitigate the likely rise in oil prices – investors remain cautious over the future supply of oil.
While the Iran sanctions begin to come into force, there are some oil price analysts who think the removal of Iran oil supplies from the broader market is set to have a bigger upward effect on oil prices, than is the more general consensus.
That view comes as Iran’s OPEC envoy told the group that no other country can take over it’s production and export quota “under any circumstances.”