Brent is back above $75 per barrel (JONATHAN NACKSTRAND)

London (AFP) – Brent North Sea crude hit a near six-month high above $75 per barrel Thursday on supply concerns that have been worsened by the United States tightening the screw on sanctions-hit Iran.

Stock markets meanwhile mostly dropped, with traders across Europe digesting mixed company earnings updates and news of the collapse of two mega-mergers in the supermarket and banking industries. 

“Brent crude oil has rallied above $75 a barrel for the first time this year on the back of tighter sanctions on Iran, while gains in West Texas Intermediate (WTI) have been curtailed by a surge in US supply,” noted Dean Popplewell, markets analyst at Oanda trading group.

Brent for delivery in June jumped to $75.60 per barrel, the highest level since the end of October. 

WTI reached $66.28 per barrel, heading towards a six-month peak.

The US removal this week of waivers that allowed countries to buy from sanctions-hit Iran is expected to hit oil supplies, though analysts are keeping watch on the region and whether OPEC responds by opening up the taps.

Oil prices had already enjoyed a strong recovery this year, with output capped by Russia and the Organization of Petroleum Exporting Countries. 

Crude futures have won support additionally on unrest in OPEC members Venezuela and Libya.

Oil kingpin Saudi Arabia meanwhile on Wednesday said it had no immediate plans to raise oil output to offset the move by Washington.

Saudi energy minister Khalid al-Falih insisted that global oil inventories continued to rise despite unrest in Venezuela and the tougher US action.

Iran’s supreme leader Ayatollah Ali Khamenei on Wednesday called the end of oil sanction waivers by the United States a “hostile measure” that “won’t be left without a response”.

– Mergers collapse –

In stock markets trading, Asian equities stuttered after New York indices retreated Wednesday from record highs, with weak economic data around the world offsetting a forecast-beating earnings season.

While the mood on trading floors remains broadly positive after a blockbuster start to the year, there are lingering concerns that growth in most parts of the world is well off the pace of the United States.

There was further negativity in Asia, with South Korea on Thursday reporting its biggest quarterly contraction since late 2008. The 0.3 percent drop was also its first fall since the last three months of 2017.

The data comes after investors have been on a buying spree for much of the year, fuelled by optimism that China and the US will hammer out a deal to end their trade war, as well as central bank dovishness.

Shanghai was the main loser Thursday, ending down 2.4 percent on concerns the Chinese government could ease up on a recent run of mini stimulus measures that have supported the economy and equities in recent months.

In Europe, shares in Deutsche Bank flattened and Commerzbank dropped 2.4 percent after Germany’s two biggest lenders ended merger talks.

British supermarket Sainsbury’s slid 4.41 percent after the UK’s competition watchdog blocked its proposed merger with Walmart-owned Asda.

– Key figures around 1115 GMT –

Oil – Brent Crude: UP 60 cents at $75.17 per barrel

Oil – West Texas Intermediate: UP 21 cents at $66.10 per barrel

London – FTSE 100: DOWN 0.3 percent at 7,447.72 points 

Frankfurt – DAX 30: DOWN 0.1 percent at 12,295.71

Paris – CAC 40: DOWN 0.3 percent at 5,560.66

EURO STOXX 50: DOWN 0.4 percent at 3,489.96

Tokyo – Nikkei 225: UP 0.5 percent at 22,307.58 (close)

Hong Kong – Hang Seng: DOWN 0.9 percent at 29,549.80 (close)

Shanghai – Composite: DOWN 2.4 percent at 3,123.83 (close)

New York – Dow: DOWN 0.2 percent at 26,597.05 (close)

Euro/dollar: DOWN at $1.1133 from $1.1156 at 2200 GMT 

Pound/dollar: DOWN at $1.2875 from $1.2902

Dollar/yen: DOWN at 111.83 yen from 112.13 yen

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Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.