Brent crude nears $70 mark as OPEC cuts help ease concerns over demand

Oil prices rallied to more than $69 a barrel on Tuesday after news that more sanctions on Iran and further production disruptions in Venezuela could help deepen OPEC supply cuts.

Brent crude went as high as $69.50 a barrel on Tuesday, its highest level this year, and the most the market has seen since mid-November last year. Meanwhile, US crude rose 43 cents to $62.02.

Iran expecting more US sanctions

The US is considering applying more sanctions on Iran, even though under the current restrictions the country’s oil exports have already been halved, according to reports. Meanwhile, Venezuela, which is also under US sanctions, has battled with yet further disruptions.

‘The supply cuts have been there for a while, but Venezuela is not improving,’ said Olivier Jakob, analyst at Petromatrix told Reuters. ‘That is taking a lot of oil away from the market.’

If sanctions on Iran and Venezuela continue and become more intense in the coming months it could deepen OPEC-led supply cuts that took effect in January and may help push oil prices above $70 levels.

Healthy economic data from US and China helps buoy oil prices

Decent economic data coming out of the world’s two largest economies, the US and China, have also helped oil prices to rise in recent weeks.

Recent figures showed healthy US factory activity in March and a return to form for Chinese manufacturing, despite growing concerns about a global economic slowdown that threatens to reduce oil demand.