Oil prices were firm on Thursday, supported by tightening sanctions against Iran announced this week but held in check by a surge in U.S. supply and concerns of an economic slowdown.

Brent crude futures were at $74.74 per barrel at 0622 GMT, up 17 cents, or 0.2 per cent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $65.89 per barrel, unchanged from their previous settlement.

Crude futures rose to 2019 highs earlier in the week after the U.S. said it would end all exemptions for sanctions against Iran, demanding countries halt oil imports from Tehran from May or face punitive action from Washington.

“Following the U.S. decision to toughen its sanctions on Iran … we have revised up our end-year forecast for Brent crude from $50 to $60 per barrel,” analysts at Capital Economics said in a note.

U.S. sanctions against Iran have denied its government more than $10 billion in oil revenue since President Donald Trump first announced the move last May, a U.S. official said on Thursday during a media call.

“Before sanctions … Iran generated as much as $50 billion annually in oil revenue.

“We estimate that our sanctions have already denied the regime more than $10 billion since May (2018),” said Brian Hook, U.S. Special Representative for Iran and Senior Policy Advisor to the Secretary of State.

The U.S. decision to try and bring down Iran oil exports to zero comes amid supply cuts led by producer Organisation of the Petroleum Exporting Countries (OPEC) since the start of the year aimed at propping up prices.

As a result, Brent prices have risen by almost 40 per cent since January.

Still, Hook said “there is plenty of supply in the market to ease that transition and maintain stable prices”.

Capital Economics said it expected “oil prices to fall this year as sluggish global growth weighs on oil demand, U.S. shale output grows strongly and investor aversion to risk assets like commodities increases”.

South Korea’s economy unexpectedly shrank in the first quarter, the Bank of Korea said on Thursday, marking its worst performance since the global financial crisis.

China’s Premier Li Keqiang said on Wednesday that his nation’s economy “still faces downward pressure”.

On the supply side, U.S. crude oil production has risen by more than 2 million barrels per day (bpd) since early 2018 to a record of 12.2 million bpd currently, making the U.S. the world’s biggest oil producer ahead of Russia and Saudi Arabia.

In part because of soaring domestic production, U.S. commercial crude oil inventories last week hit a October 2017 high of 460.63 million barrels, the Energy Information Administration said on Wednesday. That was a rise of 1.3 million barrels.

(Reuters/NAN)