Oil climbed a third day after the US sanctioned a Chinese refinery for the first time, in a marked step-up of measures to curb supply from Iran.
Brent rose above $72 a barrel after advancing 1.7% on Thursday, with West Texas Intermediate below $69. The US penalized a small Chinese oil refinery and its chief executive officer for allegedly buying Iranian oil, the Trump administration's first intervention in the Asian nation's refining system.
The sanctions are “a clear risk escalation for physical flows for the region, though today's moves stopped short of a full physical impediment to the illicit Iranian oil trade into China,” RBC Capital Markets LLC analysts including Brian Leisen wrote in a note. “While the physical implications are minimal, we think it reasonable that risk premium here is taken more seriously.”
Crude is on track for its biggest one-week gain since mid-January, after US data spurred optimism over consumption in the biggest oil consumer. However, advances have been limited by bearish headwinds, including an escalating global trade war and the specter of more OPEC+ supply from next month.
Several of the cartel's members have pledged additional cutbacks to compensate for exceeding quotas. The reductions by countries including Kazakhstan, Iraq and Russia should — in theory — offset the plans to revive halted output through to the end of next year, according to a statement on OPEC's website.
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