Oil extended gains after Iran confirmed it had seized a foreign oil tanker in the Persian Gulf earlier this week.

Brent crude gained as much as 1.3%, reversing some of the heavy losses the global benchmark suffered in the previous two sessions. Iran’s Revolutionary Guards said it captured a foreign vessel on July 14 alleged to be smuggling 1 MM liters of fuel in the Persian Gulf, according to state-run Press TV news channel. It was unclear whether the report was referring to the Riah, a small ship that entered Iranian waters and stopped transmitting its location around the same time.

Oil has fallen this week as the specter of a renewed U.S-China trade conflict dents the demand outlook, while U.S. fuel stockpiles jumped. Still, the possibility of crude flows being disrupted from the Middle East remains in focus after Iran’s Foreign Minister Mohammad Javad Zarif said his country was capable of shutting crucial oil-shipping route the Strait of Hormuz, but is unwilling to do so.

“It’s a small move considering how much prices have fallen this week,” said UBS Group AG analyst Giovanni Staunovo. “At least we know where the tanker is, in contrast to a few days ago.”

West Texas Intermediate for August delivery rose $0.38 to $57.16/bbl on the New York Mercantile Exchange. September Brent advanced $0.52 to $64.18/bbl on the ICE Futures Europe Exchange. The global benchmark crude traded at a premium of $6.88/bbl to WTI for the same month.

In an interview with Bloomberg Wednesday, Iran’s Foreign Minister Javad Zarif said the U.S. “shot itself in the foot” by pulling out of the nuclear accord with his nation. As tensions in the region continue to escalate, CNN reported that the U.S. is preparing to send 500 troops to Saudi Arabia. The U.S. is also set to brief foreign diplomats on a plan to boost maritime security in the region this week, special representative for Iran Brian Hook, said Tuesday.

Prices had been under pressure earlier on Thursday after U.S. gasoline stockpiles increased by 3.57 MMbbl last week in data released Wednesday by the Energy Information Administration, the first rise in five weeks. The median estimate in the survey forecast a 2.4 MMbbl drop. Distillate inventories rose by 5.69 MMbbl, while crude supplies fell by 3.12 MMbbl.

Oil Market News

Commodities trading giant Vitol Group has appointed Ben Marshall to the board of directors, a move suggesting that he may be in line for the top job in the Americas.

U.S. National Security Adviser John Bolton will visit Japan next week and may discuss the possibility of a coalition to guard merchant ships in waters near Iran, Kyodo reported, citing unidentified Japan-U.S. diplomatic sources.

Barclays PLC and JPMorgan Chase & Co. both cut their oil price forecasts in recent days, citing sluggish global oil demand.

Source: www.worldoil.com