Oil’s poised for a second monthly advance, propelled by the prospect of a disruption in Iranian supplies and as OPEC closes in on its target of wiping out a global glut. Futures in New York are up 3.9 percent this month, even after a near 1 percent drop on Monday following data that showed an increase in U.S. drilling activity. A potential withdrawal in May by U.S. President Donald Trump from a 2015 nuclear deal between world powers and Iran would reimpose sanctions on the producer and curb its exports. Meanwhile, OPEC’s trimming output even after concluding it’s cleared 97 percent of the surplus that’s weighed on prices.
“We’ll see oil fluctuating as uncertainties will persist over whether Trump will withdraw from the Iran nuclear agreement,” Vincent Hwang, a commodities analyst at NH Investment & Securities Co., said by phone in Seoul. “Prices have rallied as OPEC and its allies including Russia have eroded global inventories and as geopolitical risks surrounding the U.S. and the Middle East have increased this month.”
Trading on the Shanghai International Energy Exchange is closed for a Chinese public holiday. Futures for September delivery had risen 0.6 percent to 444.2 yuan per barrel on Friday, gaining 5.7 percent this month. While U.S. Defense Secretary Jim Mattis said last week that there’s been no decision on the nuclear deal, the nervousness around a potential breakdown in the accord is also spilling over into the physical oil market. Traders are unwilling to sign contracts for Iranian crude and refined products that would be valid after May 12, the deadline for Trump to decide whether to reimpose sanctions, according to recent interviews with six companies that buy and sell oil in the Middle East.
Sources and photo-credits: Bloomberg