Oil prices gained and Brent crude crossed the $70 mark for the first time in three years, as U.S. crude inventories fell for the eighth time in a row, per EIA data. Moreover, WTI crude prices breached the $64 mark for the first time in three years too.

What’s Driving Prices?

U.S. crude inventories fell 4.95 million barrels in the week to Jan 5, 2018, driving crude price higher. Moreover, OPEC member nations and Russia agreed to extend production cuts to the end of 2018, to support prices and tackle oversupply issues.

Oil prices have also been supported by fears of possible supply disruptions, owing to rising political unrest in OPEC member nations Iran and Venezuela. Iran’s demonstrations over a weak economy and high prices of goods can have a major impact on oil prices.

Moreover, Saudi Arabia’s aggression against Yemen is also a factor at play as far as the future course of oil prices is concerned. In a latest show of force, Yemen’s Houthis said that they fired a ballistic missile targeting a Special Forces camp in the Saudi border province of Najran.

Exchange of nuclear threats between the U.S. and North Korea is another factor that is keeping investors interested in the news. “The entire United States is within range of our nuclear weapons, a nuclear button is always on my desk. This is reality, not a threat,” Kim stated in his speech. To this, President Donald Trump responded that his button was “much bigger and more powerful”, and that his button worked.

Risk to OPEC

The rise in crude prices might keep the United States on track to compete with Saudi Arabia and Russia. Per a Bloomberg article, citing a statement by Iran’s oil minister Bijan Namdar Zanganeh, OPEC members are not keen on keeping crude prices above the $60 mark, primarily owing to the potential for more output.

“Seventy dollars is too much,” Eugen Weinberg, head of commodities research at Commerzbank AG told Bloomberg. “It’s not completely unexpected, given the price momentum. But there will be a reaction in U.S. shale, and OPEC’s strategy will backfire massively.”