Oil rises with support from Iran sanctions fears and remains near the highest level since 2014

UNITED STATES (OBSERVATORY) –¬†Oil prices rose slightly on Tuesday after plummeting from several-year highs in early trade, backed by concerns that US sanctions on Iran would restrict crude exports from one of its biggest producers in the Middle East.

Brent crude was $ 78.43 a barrel, up 20 cents, or 0.3 percent, after peaking at $ 79.47 a barrel, up $ 1.24, its highest level since November 2014.

US light crude <CLc1> rose 35 cents, or 0.5 percent, to close at $ 71.31 a barrel, to stay near its highest level since November 2014.

The price gap between the two crudes widened to more than $ 8 briefly, the biggest difference since April 2015, reflecting the increase in US crude supplies and the geopolitical risks of Brent crude.

Global oil prices have risen more than 70 percent over the past year because of the sharp increase in demand and production cuts by the Organization of the Petroleum Exporting Countries (OPEC) led by Saudi Arabia with other major producers, including Russia.

The United States has said it will impose sanctions on Iran over its nuclear program, raising fears that markets will face shortages later this year when trade restrictions come into effect.

A spokesman for the Tehran government said his country would resume uranium enrichment if it could not find a way to maintain the 2015 nuclear agreement with the European Union after the United States pulled out of it last week.

OPEC oil inventories fell in March to 9 million bpd above the five-year average, down from 340 million above that average in January 2017, OPEC data showed on Monday.

US crude prices are sharply lower than Brent because of the surge in US oil production to 10.7 million bpd, making the US market well supplied.

The US Energy Information Administration said on Monday that US crude oil production is expected to rise by 145,000 barrels per day to 7.18 million barrels in June.