By Deep Kaushik Vakil
(Reuters) -Oil prices gained on Tuesday after stronger economic data out of Europe, as investors also weighed the potential fallout from any fresh U.S. sanctions on Iran’s oil exports with tensions remaining high in the Middle East.
Global benchmark futures traded 80 cents or 0.9% higher at $87.80 a barrel by 0847 GMT, while U.S. West Texas Intermediate crude futures also gained 71 cents or 0.9% to $82.61 a barrel.
Data showed that overall business activity in the eurozone expanded at its fastest pace in nearly a year this month, led by a buoyant recovery in the bloc’s dominant service industry.
Britain’s blue-chip hit a record high on Tuesday. ()
Meanwhile, EU foreign ministers agreed in principle on Monday to expand sanctions on Iran following Tehran’s missile and drone attack on Israel this month.
The U.S. Senate is set to begin considering a foreign aid package that includes sanctions on Iran’s oil exports that target ships, ports, and refineries that process Iranian oil.
“The geopolitical backdrop is still very fraught with so many risks at the moment, so clearly we’re going to see a lot of volatility until there’s a lot more clarity around it,” ANZ analysts said in a podcast.
Iran and Israel going beyond “gestural sovereign attacks … risks the ire of a U.S. that right now has its own political reasons for letting Iranian oil get to water,” said John Evans at oil broker PVM.
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“Given an incident free week from Israel and Iran, oil watchers will have to look to the wider macro this week.”
Investors are waiting for the release of the U.S. gross domestic product figures and the March personal consumption expenditure data – the Fed’s preferred inflation gauge – later this week to assess the trajectory of monetary policy.
{{8849|U.S. crcrude oil inventories are expected to have increased last week while refined product stockpiles likely fell, according to a preliminary Reuters poll of analysts.