Oil Prices Continue to Rise Fueled by Iran Deal Concerns
May 07 2018 - 2:05AM
Dow Jones News
By Biman Mukherji
Oil futures rose sharply in Asian trading Monday, hitting new 3
1/2-year highs as the U.S. benchmark hovered around $70 a barrel
and a deadline to renew waivers of U.S. sanctions on Iran
loomed.
Concerns over the possibility President Donald Trump won't renew
the waivers, which expire Saturday, have pushed crude prices
higher--including by nearly 2% on Friday--even as the U.S. dollar
has rebounded. A stronger dollar often pressures prices of oil and
other dollar-denominated commodities.
On the New York Mercantile Exchange light, sweet crude for June
delivery recently was up 1% at $70.40 a barrel in the Globex
trading session. July Brent crude on London's ICE Futures exchange
rose 1.1% to $75.66.
West Texas Intermediate, the U.S. benchmark, entered Monday's
trading having gained in 15 of the past 20 trading days. Over the
same period, the WSJ Dollar Index rose some 2.5%.
Brent futures, the global benchmark, have climbed in nine of the
past 12 weeks.
The sanctions on Iran were lifted under a 2015 agreement among a
group of world powers aimed at curbing Tehran's nuclear
activities.
"We think that it is highly likely that President Trump will
exercise the exit option despite the recent best efforts of
European leaders to fix the nuclear deal," said Helima Croft, head
of commodity strategy at RBC Capital Markets.
She said the impact on the oil market from such an action would
depend on the terms of the withdrawal from the deal. A more gradual
reinstatement of U.S. sanctions would likely allow foreign refiners
to slowly reduce their Iranian imports, said Ms. Croft.
With outages in major oil producer Venezuela and member nations
of the Organization of the Petroleum Exporting Countries firmly
adhering to continuing output caps, a potential reduction in
Iranian production if U.S. sanctions are reimposed would be yet
another factor offsetting record American crude output, analysts
said.
Escalated tensions with Iran could restrict the ability of oil
to pass through the Strait of Hormuz out of the Persian Gulf, said
Stuart Ive, private client manager at OM Financial. He said the
hard positions taken by the U.S. and Iran meant "the Iranian
nuclear agreement is already all but dead."
Write to Biman Mukherji at biman.mukherji@wsj.com
(END) Dow Jones Newswires
May 07, 2018 02:50 ET (06:50 GMT)
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