Oil market rose by more than 4% on Wednesday as tensions heightened after the United States moved to evacuate its embassy in Iraq due to heightened security concerns in the Middle-East.
Brent crude increased by $2.90 or 4.34% to $69.77 per barrel and the US West Texas Intermediate ,WTI, crude gained $3.17 or 4.88% to close at $68.15 per barrel.
Traders bought crude futures on reports the US was preparing to evacuate its embassy in Iraq,which is the second biggest member of the Organisation of the Petroleum Exporting Countries ,OPEC.
US President Donald Trump said on Wednesday that this action was because the Middle East “could be a dangerous place”, though he didn’t give further reasons for this, market analysts say it may be due heightened security risks in the region.
Meanwhile, Reuters reported that the State Department had authorized voluntary departures from Bahrain and Kuwait, updating its worldwide travel advisory to reflect the latest US stance, saying, “On June 11, the Department of State ordered the departure of non-emergency US government personnel due to heightened regional tensions”.
The decision by the US to evacuate some personnel comes at a volatile moment in the region with President Trump’s efforts to reach a nuclear deal with Iran appear to be deadlocked.
Also, US intelligence indicates that Israel has been making preparations for a strike against Iran’s nuclear facilities.
Iran’s Minister of Defense Aziz Nasirzadeh said the country will strike US bases in the region if nuclear talks fail and conflict arises.
This development prompted the decision and reports of the potential evacuation pushed up oil prices by more than 4%.
Ongoing tension with Iran means its oil supplies are likely to remain curtailed by sanctions.
Meanwhile, this supply issue may plugged as OPEC and its allies ,OPEC+, plans to boost oil production by 411,000 barrels per day in July as it looks to unwind production cuts for a fourth straight month.
Support also came following news of a trade deal between the US and China, which could boost energy demand in the world’s two biggest economies.
President Trump said China would supply magnets and rare earth minerals and the US will allow Chinese students in its colleges and universities. This, he added the deal is subject to final approval by him and President Xi Jinping.
