London — 1008 GMT: Crude oil futures were higher in early European trade, with the escalating geopolitical concerns that have dominated much of the week now being joined by concerns about the impact of Topical Storm Barry on the US Gulf Coast.
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At 11:08 BST (1008 GMT), September ICE Brent futures were at $66.95/b, up 43 cents/b from Thursday's settle, while the August NYMEX light sweet crude futures contract was up 20 cents/b at $60.40/b.
The imminent arrival of Tropical Storm Barry in the USGC region has buoyed oil prices, with damage limitation procedures already being taken in preparation. Offshore drillers have now shut in 1 million b/d of production, equating to 53% of the Gulf of Mexico's oil output, the Bureau of Safety and Environmental Enforcement said Thursday.
"The storm is the main thing in the short term, it?s brewing on the Mexican Gulf, we are seeing offshore [drillers] being cut," according to Ole Hansen, head of commodity strategy at Saxo Bank.
Meanwhile, the geopolitical tensions between the UK and Iran have also kept oil prices supported, with Iran calling on the UK to immediately release the Iranian oil tanker that was seized last week.
"The geopolitical tensions are playing their part [in the higher oil prices]," Hansen added.
Furthermore, a US Department of State spokeswoman has warned that the US will sanction China if it continues to import Iranian crude in violation of US sanctions.
"We're going to zero [exports of Iranian crude] and...countries that don't abide by US sanctions will face repercussions for not abiding by US sanctions," spokeswoman Morgan Ortagus said during a briefing Thursday. "That goes for China or any other country in the world. We expect all countries to abide by US sanctions."
Prices initially seemed to shrug off a bearish report from the International Energy Agency Friday highlighting an over-supplied crude oil market.
"The IEA report highlighted the surplus in June, we will be looking for that to improve, also still highlighted demand concerns. But people aren't worrying about the demand, after [Fed Chair Jerome] Powell's dovish comments curbed some fears," Hansen said.
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