Oil prices rose on Tuesday, with USA crude breaking through $70 a barrel, after the evacuation of two Gulf of Mexico oil platforms in preparation for a hurricane.
Brent crude, the global benchmark, was up 0.58% to $78.09 a barrel on London's Intercontinental Exchange.
Many worldwide shippers have stopped loading Iranian oil as USA financial sanctions against Tehran prevents them from insuring its cargoes. USA markets were closed on Monday for Labor Day. Five Chinese companies including state-run Chinaoil, Unipec, CNPC Fuel Oil and Zhenhua Oil, along with a private trader, delivered crude against the September contract, marking its first physical settlement event.
The oil price is higher Tuesday, amid news Anadarko petroleum has evacuated its two rigs based in the Gulf of Mexico, as Hurricane Gordon approaches the area.
Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA, said many crude futures traders were "caught long and wrong over the past 24 hours due to tropical storm buying frenzy", adding that "prices pulled back considerably as the magnitude of the storm suggests production losses will be limited".
Japan's Iranian oil imports increased year on year for the third consecutive month in July as refiners rush to take cargoes before USA sanctions come into effect against the Middle East supplier in November. The US sanctions have already started to put curbs on Iranian oil imports.
Iranian President Hassan Rouhani says his country will continue exporting crude oil despite US efforts to stop it through sanctions. "U.S. producers are resisting temptation and exercising capital discipline, OPEC and Russian Federation have convinced market participants they are managing the supply of over half of global production, the U.S.is using sanctions more actively, and several key OPEC producers are at risk of being failed states".
India will allow state refiners to import Iranian oil if Tehran arranges and insures tankers.
Crude inventories fell by 1.17 million barrels to 404.5 million barrels in the week to August 31, while refinery crude runs rose by 198,000 barrels per day, the API data showed. The bank also said it expects Brent to average at $75 per barrel, a huge jump from its prior prediction of $55 per barrel.
The U.S. administration has been calling for an worldwide suspension of oil imports from Iran by November 4 and may impose sanctions on companies that balk.