Oil prices were stable on Tuesday as ongoing production cuts by OPEC and looming US sanctions against Iran threatened to tighten the market amid signs of ongoing strong demand.
USA crude futures climbed 26 cents, or 0.37%, to $70.96 a barrel on the New York Mercantile Exchange.
Alongside a broader escalation in regional conflict, Citi economists argue a sustained increase in oil prices and weaker-than-anticipated global economic growth could combine to heighten the risk for financial market participants, CNBC reported.
Many analysts predict the impact on Iranian crude supply later this year won't be as strong, some saying Trump could reduce Iran's oil shipments by 300,000 to 500,000 BPD.
This followed stepped up tension in the Middle East after the opening of the United States of America's Embassy in Jerusalem, Israel.
USA crude prices are at the steep discount to Brent as a more than 25 percent rise in US crude production to 10.7 million barrels per day has left the American market well supplied.
Otunuga told Arab News that the price of oil has further room to rise this week.
Brent crude was up 20 cents at 77.32 dollars a barrel by 1315 GMT and USA light crude rose 10 cents to 70.80 dollars.
In terms of non-OPEC oil supply, the cartel revised the forecast marginally higher compared to last month's assessment, by 10,000 bpd, and now expects non-OPEC supply growth at 1.72 million bpd year on year in 2018.
Depleted stocks of distillates, like diesel, in the USA are also helping lift oil prices, Mr. Headrick said. Diesel futures rose 1.24% to $2.2496 a gallon.
While Iran has given European nations a two-month window in which to guarantee that the nuclear deal will remain intact, the U.S.'s hawkish national security adviser John Bolton said Sunday that the U.S.is prepared to impose sanctions on European companies if their governments don't heed President Trump's demand to stop dealing with Iran.
Discussing global economic growth, however, OPEC pointed out that "the build-up of potentially disruptive concerns has increased", citing the latest U.S. sanctions on Russian Federation, tariffs on Chinese products in combination with considerable requests by the U.S.in trade negotiations with China, U.S. tariffs on steel and aluminum, prolonged North American Free Trade Agreement (NAFTA) negotiations, and the U.S. withdrawal from the Joint Comprehensive Plan of Action (JCPOA) with Iran.
Capital Economics analysts said OPEC is well-positioned to offset any fall in output from Iran caused by the re-imposition of sanctions on the country.