Oil Prices Rise After Two Days Losses

Oil prices rose up on Thursday after two days of losses, supported by concerns over disruptions to Iranian oil supplies due to nearing Western sanctions.

In a move that could seriously complicate Iran’s oil exports after a European Union embargo comes into force on July 1, a major Chinese ship insurer will halt indemnity cover for tankers carrying Iranian oil, sources told media.

Brent crude oil futures rose 33 cents to 122.67 dollars a barrel and U.S. crude gained 48 cents to 101.95 dollars.

Trading volumes were moderate for both contracts ahead of Easter public holidays in Europe and the U.S.

Oil prices have fallen by three dollars per barrel over the last two sessions together with other risk assets amid fading expectations for more monetary stimulus from the U.S. and due to an increase in U.S. oil inventories.

“The stock market and oil both moved lower Wednesday. Oil is recovering because of geo-political risk over the long weekend,” said Christopher Bellew, broker with Jefferies Bache.

China is the top buyer of Iranian crude and the insurance move is the first sign Chinese refiners may struggle to obtain the shipping and insurance they need to keep importing from OPEC’s second-biggest producer.

Industry sources earlier told Reuters Japanese refiners planned to cut crude imports from Tehran yet again in April as they shied away from renewing annual contracts.

“The situation regarding Iranian crude exports is getting more and more complicated as U.S. and EU sanctions are starting to have an ever bigger impact,” said David Wech from JBC Energy.

Adding to supply disruptions worries, explosions had temporarily shut on Thursday both of the pipelines bringing about a quarter of Iraq’s crude exports from Kirkuk to the Turkish port of Ceyhan on the Mediterranean.

It was not immediately clear what had caused the blasts but sabotage is common on oil pipelines into Turkey from Iraq, an area where Turkish Kurd separatist militants operate.

Later in the day, the market’s focus will shift to jobs data from the U.S., the world’s top oil consumer and importer.