An Iraqi worker gauges gas emissions from an oil pipe at the Daura oil refiner
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Oil prices rose more than 2% on Monday on concerns that Iran’s seizure of a British tanker last week may lead to supply disruptions in the energy-rich Gulf.
Brent crude futures climbed $1.41, or 2.26%, to $63.88 a barrel by 0840 GMT.
West Texas Intermediate (WTI) crude futures were up $1.13, or 2.03%, at $56.76 a barrel.
Last week, WTI fell over 7% and Brent lost more than 6%.
Tensions surrounding Iran “have likely added to the already strong geopolitical risk premium”, JBC Energy said in a note.
Iran’s Revolutionary Guards said on Friday they had captured a British-flagged oil tanker in the Gulf in response to Britain’s seizure of an Iranian tanker earlier this month.
The move has increased the fear of potential supply disruptions in the Strait of Hormuz at the mouth of the Gulf, through which flows about one-fifth of the world’s oil supplies.
Britain was weighing its next moves on Monday, with few good options apparent as a recording emerged showing the Iranian military defied a British warship when it boarded and seized the ship.
Capping gains was news that Libya’s Sharara oilfield, the country’s biggest, had resumed production at half capacity on Monday after being shut since Friday, which caused an output loss of about 290,000 barrels per day (bpd).
Meanwhile, data late last week showed shipments of crude oil from Saudi Arabia, the world’s top oil exporter, fell to a 1-1/2-year low in May.
Speculative money is flowing back into the oil markets in response to the escalating dispute between Iran, the United States and other Western nations playing out in Gulf waters, along with the signs of falling supply.
The Iranian capture of the ship in the global oil trade’s most important waterway was the latest escalation in three months of confrontation with the West that began when new, tighter U.S. sanctions on Iran took effect at the start of May.
Hedge funds and other money managers raised their combined futures and options positions on U.S. crude for a second week and increased their positions in Brent crude as well, according to data from the U.S. Commodity Futures Trading Commission and the Intercontinental Exchange.
Goldman Sachs on Sunday lowered its forecast of growth in oil demand for 2019 to 1.275 million bpd, citing disappointing global economic activity.
