190627 oil prices
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New York: Oil headed for the biggest weekly gain in eight months as the US toughened sanctions on Iran and President Donald Trump signalled a possible thaw in the long-running trade war between the world’s two biggest economies.

Futures were up 0.7 per cent in London on Friday, on track for a weekly rise of 7.7 per cent. Trump tightened the screws on Iran by sanctioning the Islamic Republic’s central bank in retaliation for an attack that crippled Saudi Arabian oil production.

Brent crude for November settlement rose 43 cents to $64.83 a barrel at 11:33am. New York time on the ICE Futures Europe Exchange. Options traders have become the most bullish on Brent in eight years, with the price of one-month benchmark calls relative to puts at the highest since 2011.

West Texas Intermediate for October delivery, which expires Friday, gained 67 cents to $58.80 on the New York Mercantile Exchange. Brent crude was at a $6.09 premium to the US marker for November.

Separately, Trump said China expressed interest in resolving the trade deadlock, calming demand concerns that have weighed on oil prices.

“The Iran headline heightens tension in the region” that produces a large amount of the world’s crude, said Michael Hiley, head of OTC energy trading with LPS Partners. “That’s bullish.”

Rystad Energy and FGE cautioned that Saudi Arabia’s recovery from last weekend’s aerial attacks on oil installation could take longer than the state-owned energy company has indicated. The kingdom’s resort to obtaining supplies from other sources is fanning concerns about the length of the disruption.

Saudi Arabia also is depleting stockpiles to meet export commitments and operating without its usual buffer of spare capacity, increasing risks for the market should there be other emergencies.

In the US, investors will be monitoring the aftermath of a tropical storm that inundated large swaths of South Texas and affected oil facilities from refineries to pipelines.