Brent Crude Hits New High On Soaring Demand

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Brent, the worldwide benchmark, rose as much as 1% at $79.47 per barrel around 8:30 a.m. ET.

U.S. West Texas Intermediate (WTI) crude futures were at $71.09 a barrel, up 13 cents and also not far off their November 2014 high of $71.89 a barrel reached last week.

Much of the Iran's oil exports head to Asia now, with over than 1.5 million barrels per day sent to the likes of China, Japan, South Korea, and India.

"WTI is expected to be relatively weaker versus other benchmarks on the back of growing Cushing stockpiles and increasing domestic production in the US", said Virendra Chauhan, an analyst at industry consultant Energy Aspects Ltd., referring to the largest American storage hub.

"The potential double supply shortfall represented by Iran and Venezuela could present a major challenge for producers to fend off sharp price rises and fill the gap, not just in terms of the number of barrels but also in terms of oil quality", it said. The coming US sanctions pushed up oil prices last week after President Donald Trump withdrew the United States from the nuclear deal. The rising oil prices are also giving the government a headache as a chunk of its annual budget will now be required in its purchase, thereby compromising on other social sectors. If demand growth continues to be strong-as now expected-an already tight oil market could become even tighter amid geopolitical concerns, driving oil prices further up.

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World supply, meanwhile, rose 1.78 million bpd in April from a year earlier, driven predominantly by non-OPEC production. As the dollar strengthens, investors can retreat from dollar-denominated commodities like oil.

OPEC figures published on Monday showed oil inventories in OECD industrialized nations in March fell to 9 million barrels above the five-year average, from 340 million barrels above the average in January 2017.

After the plans for the United States to pull out of the Iran nuclear deal became known, oil prices surged over the uncertainty of what would happen to Iran's oil industry if the U.S. reimposed sanctions, limiting Iran's production.

The decision by US President Donald Trump to withdraw from the Iran deal "has switched the focus of oil market analysis from the fundamentals to geopolitics", the International Energy Agency wrote in its regular monthly report.

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