Oil gains ground as Gulf oil tanker seizure raises tensions

TOKYO (Reuters) – Oil prices rose Monday amid heavy tensions in the Middle East following the seizure of a British oil tanker by the Iranian army late last week.

Futures contracts on Brent rose 51 cents, or 0.8%, to $ 62.98 per barrel at 00:42 GMT. The international benchmark reached $ 63.47 earlier.

West Texas Intermediate (WTI) futures prices increased 15 cents, or 0.3%, to $ 55.78.

WTI fell more than 7% and Brent more than 6% last week.

"Declining global demand and rising US inventories have made oil charts very bearish, but it may not last, as tensions remain high in the Persian Gulf," said Edward Moya, Senior Market Analyst. at OANDA in New York.

Iran's Revolutionary Guards have reportedly captured a British-flagged oil tanker in the Gulf after Britain seized an Iranian ship earlier this month, adding to tensions on a vital route of international oil transportation.

Britain was weighing its next maneuvers Sunday, with few good apparent options, a record showing that the Iranian army defied a British warship when it embarked and seized the ship three days ago.

Prime Minister Theresa May's office announced she would chair a meeting of the UK Emergency Response Committee Monday morning to discuss the crisis.

A senior US administration official announced Friday that the United States will destroy all Iranian drones that fly too close to its ships.

A day earlier, the United States had declared that one of their naval ships had "destroyed" an Iranian drone in the Strait of Hormuz after the plane had threatened the ship, but Iran had indicated that it had no information on the loss of a drone.

The International Energy Agency (IEA) does not expect a significant rise in oil prices as demand slows and global crude oil markets are saturated, the executive director said Friday , Fatih Birol, in public comments.

The IEA has reduced its forecast of 2019 oil demand growth from 1.2 million bpd / d to 1.1 million barrels a day due to the slowdown in the global economy, said Birol at Reuters during an interview granted the day before.