Oil prices rose above $25 today after new data showed a sharp drop in US crude stocks, raising concerns over whether there was enough of a supply cushion if there were any disruption to world oil flows.
Crude has gone up nearly 8 per cent this week, although prices are $3 off the six month high of over $28 hit earlier this month.
The overnight rally was driven by the latest report by industry group the American Petroleum institute (API) on the health of US national fuel stockpiles.
The API reported a hefty fall in crude inventories of 7.32 million barrels in the week to April 12th to almost 319 million barrels, reducing the once substantial year-on-year surplus to just under four million.
Analysts said the API fall in national crude stocks did not take into account disruptions to Venezuelan supplies last week due to protests at state oil firm Petroleos de Venezuela or Iraq's oil ban in support of the Palestinians, which wiped some two million bpd from the world market.
"This definitely makes the Venezuelan problem and the Iraqi embargo seem more important," said Mr Tim Evans, senior analyst at IFR-Pegasus.
Venezuela, which supplies some 13 per cent of all US fuel imports, saw oil operations thrown into turmoil last week as protests by PDVSA employees culminated in a three-day national strike and the brief removal from office of President Hugo Chavez.
Oil supplies from Iraq, however, looked unlikely to return any time soon after Baghdad said it was considering an extension to its crude export ban beyond the initially announced 30 days.
Iraq suspended exports - about four percent of internationally traded oil - on April 8th for one month to protest Israel's incursions into Palestinian areas of the West Bank.
Iraq's neighbour Iran has called for Islamic states to implement a united one-month oil ban against Israel's main allies, but heavyweight Arab oil exporters Saudi Arabia and Kuwait, have rejected the idea and assured steady supplies.