Crude prices gained 3 percent overnight and have been up 5 percent since US pulled out of the nuclear deal with Iran.
Prices were up 12 percent last month. Meanwhile, US weekly inventories declined by 2.2 million barrels.
“The geopolitical events are driving the oil prices and we have to definitely get used to higher oil prices going into the future,” said David Lennox, analyst, Fat Prophets.
As an outcome of US pulling out of the Iran deal, if sanctions are applied to Iranian oil, then one could remove 1-1.5 million barrels of oil from the supply chain and the demand may not fall by that same amount, so prices will definitely trend higher, added Lennox.
The House is maintaining a break price for year end at $74-84 per barrel.