April 26 (UPI) — Renewed uncertainty over a deal that lets Iranian crude oil flow through the market helped trigger a strong rally in crude oil prices on Thursday.
The price of oil moved lower after U.S. President Donald Trump seemed to suggest earlier this week there may be some leeway on the U.N.-backed nuclear agreement with Iran. The agreement allows Iran to export some of its oil as part of a package of sanctions relief measures. In exchange, Iran committed to scaling back its nuclear ambitions, though the president has said the deal is riddled with flaws.
Speaking to reporters after White House meetings this week, French President Emmanuel Macron said that, in his view, Trump is through with the agreement. He decides formally in May.
“Even though Macron now admits what we’ve been saying for some time, I think part of the market is still skeptical that Trump will go through with sanctions,” Joe McMonigle, a senior energy analyst at Hedgeye Risk Management, told UPI.
On Thursday, French supermajor Total added that, from its viewpoint, there was uncertainty on the supply-side, pointing to concerns about a looming deficit amid higher global demand.
The price for Brent crude oil was up 0.95 percent as of 9:16 a.m. EDT to $74.69 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.57 percent to $68.44 per barrel.
Markets turned lower during Wednesday trading after the U.S. government reported a build in domestic crude oil inventories. U.S. production levels have offset an effort by the Organization of Petroleum Exporting Countries to drain a market surplus with voluntary production cuts.
On the economic front, European Central Bank President Mario Draghi said growth in the region averaged 2.7 percent last year, its highest level since 2007. That’s supportive of demand, though he added that most indicators suggested there was some growth moderation since the beginning of the year.
“The risks surrounding the euro area growth outlook remain broadly balanced,” he said in his prepared remarks. “However, risks related to global factors, including the threat of increased protectionism, have become more prominent.”
Protectionism by way of tighter trade policies has emerged as an underlying risk to the global economy. In its so-called Beige Book, the Federal Reserve Bank of Philadelphia said the U.S. outlook was generally positive, though various economic sectors were showing anxiety over imposed or proposed tariffs from China and the United States.