Rusted out “pump-jacks” in the oil town of Luling, Texas.
Oil prices turned sharply lower heading into Thursday’s settlement after trading in a tight range much of the day.
Brent crude earlier topped $75 per barrel for the first time in nearly six months as quality concerns halted some Russian crude exports to Europe and the United States prepared to tighten sanctions on Iran.
Wednesday’s report of a bigger-than-expected build in U.S. crude inventories last week to their highest since October 2017 was weighing on the U.S. benchmark, analysts said.
U.S. West Texas Intermediate crude settled 68 cents lower at $65.21 per barrel, down 1% and slipping further from this week’s 2019 high at $66.60.
Brent crude futures fell 22 cents at $74.35, breaking a four-day winning streak. Brent earlier hit a session high of $75.60, the strongest since Oct. 31.
Poland and Germany suspended imports of Russian crude via the Druzhba pipeline due to contamination.
The pipeline can ship up to 1 million barrels per day, or 1 percent of global crude demand. About 700,000 bpd of flow was suspended, according to trading sources and Reuters calculations.
“We consider the quality issues with Russian crude oil as a supply disruption that is happening at the same time sanctions on Iran and Venezuela are impacting supply,” said Andy Lipow, president of Lipow Oil Associates in Houston.
U.S. attempts to drive Iranian oil exports down to zero also boosted prices.
The United States this week said it would end all exemptions for sanctions against Iran.
Iran has been under U.S. sanctions for more than six months, but several major buyers, including China and India, were given temporary exemptions until this week. Beginning in May, those countries have to halt oil imports from Tehran or face sanctions.
The U.S. decision comes amid supply cuts led by OPEC since the start of the year aimed at propping up prices.
Still, Brian Hook, U.S. special representative for Iran and senior policy adviser to the secretary of state, said on Thursday “there is plenty of supply in the market to ease that transition and maintain stable prices.”
Consultancy Rystad Energy said Saudi Arabia and its main allies could replace lost Iranian oil.
“Saudi Arabia and several of its allies have more replacement barrels than what would be lost from Iranian exports,” said Rystad’s head of oil research, Bjoernar Tonhaugen.
“Since October 2018, Saudi Arabia, Russia, the UAE, and Iraq have cut 1.3 million bpd, which is more than enough to compensate for the additional loss,” he added.