Oil Advances on Iran Tension as U.S. Sanctions Chinese Company - Bloomberg

Oil Advances on Iran Tension as U.S. Sanctions Chinese Company - Bloomberg:

Oil rallied for a third day as heightened tensions in the Persian Gulf threatened to disrupt energy flows from the crude-rich region, while a tepid demand outlook kept a lid on gains.

Futures in New York rose as much as 0.5% after climbing 1.7% over the past two sessions. Secretary of State Michael Pompeo said Monday that the U.S. had sanctioned a Chinese state-run oil trader for violating White House-imposed restrictions on Iranian crude. Meanwhile, U.K. Foreign Secretary Jeremy Hunt announced that European governments will assemble a naval mission to provide safe passage for ships through the gulf after Iran seized a British tanker.

The renewed tension around the Strait of Hormuz, through which around a third of the world’s seaborne oil flows, comes after five straight weeks of declines in American crude inventories have led to a tighter supply picture. Only a weak global demand outlook with few signs the U.S.-China trade war will be resolved soon are keeping oil prices from rising further.

West Texas Intermediate for September delivery climbed 24 cents, or 0.4%, to $56.46 a barrel on the New York Mercantile Exchange as of 7:26 a.m. in London. The August contract climbed 1.1% on Monday as it expired.

Brent for September settlement added 32 cents to $63.58 a barrel on the ICE Futures Europe Exchange after settling 1.3% higher on Monday. The global benchmark was trading at a $7.14 premium to WTI.