Jan. 11 (UPI) -- Jitters ahead of President Trump's decision on oil-related sanctions for Iran and high global demand pushed oil prices ever close to $70 per barrel on Thursday.
Crude oil prices are up nearly 4 percent in the span of seven trading days in one of the commodity's sharpest rallies in years. Prices were expected to cool off after jumping in mid December when the Forties pipeline system, which carries about 40 percent of total North Sea oil production, was shut down. The line came back on stream over the New Year holiday weekend, but 2018 started with political unrest in Iran, one of the leading producers in the Organization of Petroleum Exporting Countries.
Though production hasn't been impacted, the protests are widely viewed as reason enough for U.S. President Donald Trump to go against the principles of the Joint Comprehensive Plan of Action -- the U.N.-backed Iranian nuclear deal -- and decide Friday to re-impose oil-related sanctions on Iran.
That would sideline the estimated 1 million barrels of Iranian oil per day on the market already and would come at a time when the market has little room for disruptions. A market titled toward the supply side two years ago could tolerate the removal of barrels, but the gap between supply and demand has all-but vanished.
Giovanni Staunovo, a commodity analyst for UBS in Switzerland, said crude oil inventories in the United States, as well as in Asia, are shrinking, which has supported a steady curve upward for crude oil prices since June.
"Geopolitical factors are probably in focus as well today, with the upcoming Trump decision on Iran and its implication on Iranian crude exports," he told UPI.
Crude oil prices were in volatile territory early Thursday, with the price for Brent crude oil swinging between small gains and losses as the global benchmark tests $70 per barrel. Brent last traded above $70 per barrel in early December 2014.
The price for Brent crude oil was down 0.13 percent as of 9:17 a.m. EST to $69.11 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.41 percent to $63.83 per barrel.
WTI is still in the February contract, while Brent moved into March.
Several analysts this week have warned the rally may run out of steam, Trump notwithstanding. The U.S. Energy Information Administration this week said it expects Brent to average $60 per barrel for the year, up from the $54 per barrel average for 2017.
"In both 2018 and 2019, EIA expects total global crude oil production to be slightly greater than global consumption, with U.S. crude oil production increasing more than any other country," its latest report read.
Phil Flynn, the senior market analyst for the PRICE Futures Group in Chicago, said in an emailed market report that demand strains were offsetting some of the production trends.
"It's not just U.S. demand," he said. "This demand surge is a global phenomenon."