Oil Rises to $70 for First Time Since July as Stockpiles Decline

Oil rose to $70 a barrel in New York for the first time in a month after U.S. crude inventories fell more than forecast and as political tensions in the Middle East persisted.

West Texas Intermediate futures added as much as 0.8 percent, having climbed 1.4 percent on Wednesday after the Energy Information Administration said stockpiles dropped for a second week. With U.S. sanctions on Iran set to kick in in just over two months, the chief of staff of the nation’s armed forces warned that any attempt to block oil exports would have grave security repercussions.

Most of Iran’s customers are already facing difficulties buying the country’s crude even before sanctions are enforced on Nov. 4. India and China’s combined purchases of Iranian oil could drop about 23 percent to almost 1 million barrels a day amid the U.S. restrictions, ESAI Energy said. Venezuela’s slumping output and draining American stockpiles are also helping boost prices.

“The oil market is once again tightening after a short period in late June and early July when it was likely oversupplied,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. “Iranian oil-export declines are already visible well in advance of U.S. oil-related sanctions.”

WTI crude for October delivery rose as much as 57 cents to $70.08 a barrel on the New York Mercantile Exchange, rising above $70 for the first time since July 31, and traded for $69.93 as of 8:48 a.m. local time. Total volume traded was about 38 percent below the 100-day average.

Brent for October settlement advanced 52 cents to $77.66 a barrel on the London-based ICE Futures Europe exchange, after climbing to the highest since July 10 on Wednesday. The global benchmark crude was at a $7.75 premium to WTI, the widest in more than a month.

Oil’s also been helped by wider financial-market optimism after President Donald Trump said that talks between the U.S. and Canada to overhaul the North American Free Trade Agreement are going well and that they could reach a deal this week. That follows a pact with Mexico agreed earlier this month.

Other oil-market news:

Government data released Wednesday showed U.S. stockpiles declined 2.57 million barrels last week, more than the 1.49 million-barrel drop forecast in a Bloomberg survey. Iraq sees a need to increase crude exports and said it’s ready to ship more as soon as OPEC agrees on how members will share a collective supply boost, according to the acting director-general of the state-run Oil Marketing Co. OPEC said compliance with output targets was 109 percent in July, showing “significant progress towards the goal set” by the group and its partners at their most recent meeting in June, according to a statement.