However, the tailwinds for crude oil now vastly outnumber the headwinds, so prices will likely continue upwards in the coming days, especially in light of the escalation in Israel following the move of the USA embassy from Tel Aviv to Jerusalem that ignited protests in Gaza, prompting an immediate military response from the IDF.
The difference between the two benchmarks briefly widened to more than $8 a barrel, the widest gap since April 2015, reflecting surging US crude supplies and a greater geopolitical risk to Brent-based crudes. The coming USA sanctions pushed up oil prices last week after President Donald Trump withdrew the United States from the nuclear deal.
US President Donald Trump's decision to reintroduce sanctions on Iran have thrown a curveball into Middle East relations, with many expecting this to have continued ripples throughout the world and region.
China reported weaker-than-expected investment and retail sales in April and a drop in home sales, clouding its economic outlook even as policymakers try to navigate debt risks and defuse a heated trade dispute with the United States.
The data poses worries that near-record high refinery runs may be short-lived.
In April, Chinese crude oil imports set a new record-at 9.6 million bpd they beat the previous daily record of 9.57 million bpd from January this year.
Source U.S. Energy Information Administration Short Term Energy Outlook May 2018
Global oil supplies could be hit by the decision by the USA to pull out of the Iran nuclear deal, and also by falling production in crisis-hit Venezuela, the IEA said on Wednesday.
The agency estimates that global oil inventories fell an average of almost 0.6 million barrels per day (bpd) in each of the past five quarters (January 2017 through March 2018).
Additionally, the market retreated as the U.S. Dollar strengthened against other currencies to the highest since December.
"In Venezuela, the pace of decline of oil production is accelerating and by the end of this year output could have fallen by several hundred thousand barrels a day", the IEA said. With Japan and South Korea already indicating that they will aim to attain a waiver from the USA in order to continue buying Iranian crude, the impact of Trump's actions will rest on how far he goes in comparison with Obama's previous sanctions.
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