By Laura Sanicola
(Reuters) – Oil prices extended gains to settle above the dollar on Thursday as geopolitical tensions and production cuts overcame caution over the U.S. Federal Reserve’s rate cuts.
June futures rose above $91 a barrel before settling $1.30, or 1.5%, at $90.65. U.S. West Texas Intermediate (WTI) May futures rose $1.16, or 1.4%, to $86.59 a barrel.
Both contracts closed Thursday at their highest levels since October and continued to rise after the session ended, having received support in recent days from rising geopolitical tensions and potential supply risks.
Oil rose on Thursday following reports that Israeli embassies around the world were put on high alert due to growing threats of an Iranian attack on Israeli diplomats.
Iran, OPEC’s third-largest producer, has vowed revenge against Israel for Monday’s attack that killed high-ranking Iranian military personnel. Israel has not claimed responsibility for the attack on the Iranian embassy in Syria.
In a sharp change of tone, Washington on Thursday issued its strongest public rebuke of Israel since the war with Hamas began, warning that US policy on Gaza will be determined by whether Israel takes steps to ensure the safety of its citizens. Palestinian civilians and humanitarian workers. .
The United States imposed new Iran-linked counterterrorism sanctions on Thursday against Oceanlink Maritime DMCC and its ships, citing its role in shipping cargo on behalf of the Iranian military.
The United States is using financial sanctions to isolate Iran and hinder its ability to fund its proxy groups and impede the country’s support for Russia’s war in Ukraine, the Treasury Department said.
Prices were also supported after US Secretary of State Antony Blinken said Ukraine will eventually join NATO as support for the country remains “rock solid” among member states.
Oil’s recent gains also followed Ukrainian attacks on Russian refineries that cut fuel supplies and news that Mexican state energy company Pemex asked its trading unit to write off up to 436,000 barrels per day of crude exports this month as it prepares to process domestic oil at the new Dos Bocas refinery.
“All of these geopolitical factors happened at the same time, fueling bullish sentiment and ultimately some profit taking,” said Frank Monkham, senior portfolio manager at Altimo LLC.
A meeting on Wednesday of top ministers from the Organization of the Petroleum Exporting Countries and its allies (OPEC+), including Russia, kept oil supply policy unchanged and prompted some countries to step up enforcement of production cuts.
The group said some members will make up for oversupply in the first quarter. He also said Russia would shift to manufacturing rather than export limits.
Investors will look to economic data and monetary policy for potential clues about the outlook for oil demand.
U.S. jobless claims have risen more than expected over the past week, according to Labor Department statistics, as labor market conditions are gradually easing.
This came after Federal Reserve Chair Jerome Powell expressed caution on Wednesday about the timing of future interest rate cuts, after recent data showed stronger-than-expected job growth and inflation.
Friday’s March jobs report will likely show a gain of 200,000 nonfarm jobs in March, after rising 275,000 in February, according to a Reuters poll.