The price for Brent crude oil was up 1.35 percent as of 9:16 a.m. EDT to $75.88 per barrel. A decision is due by Saturday on whether the USA will renew the waivers for some US sanctions on Iran's oil exports.
Canadians are likely to continue paying high prices at the gas pumps as oil prices rose to their highest levels since late-2014 on Monday, boosted by concerns over Venezuela's economic crisis and a looming decision on whether the United States will impose sanctions on Iran. Production hasn't been catching up, however. In this regards, Saudi Arabia is throwing everything including the kitchen sink to support higher oil prices ahead of its Aramco initial public offering.
Analysts warned that the deepening economic crisis in major oil exporter, Venezuela, threatened to further crimp its production and exports.
Crude prices have proven particularly hard to pin down lately because of factors such as geopolitical risk and the rise of the US shale industry, as well as efforts by the Organization of Petroleum Exporting Countries and external producers to eliminate global supply. "The continuously declining inventory has taken any cushion out of the global oil market", said Goehring, "If the inventory draws down any further, it will have a high-level impact on the price".
Oil futures in NY were on the verge of passing $70 a barrel for the first time since November 2014 as traders braced for a re-imposition of US sanctions on Iran.More news: Clarkson PLC (LON:CKN) Weekly Ratings as of May 5, 2018
Growing U.S. shale production might help close the gap a little, but that is far from enough.
The increases came despite nine US oil rigs bringing the total count to 834, energy services firm Baker Hughes said on Friday. That was the fifth consecutive week of gains.
Noticeably, a lot of this growth came from the transport sector with a surge in larger vehicle purchases as SUV and light trucks represented almost two-thirds of total US sales in 2017 up from 47 per cent in 2011, according to IEA data. And this doesn't account for the potential supply impact from USA shale producers that for some unusual reason are no longer considered a threat to OPEC and other non-U.S. producers. For investors seeking exposure to the sector, analysts see more appeal in energy equities than in the commodity itself. This is contrary to the global reflation trade that so many have been betting on over the past year and perhaps a warning sign on the sustainability of higher oil prices.
Saudi Arabian Energy Minister Khalid al-Falih said he was concerned about possible shortages of spare crude production capacity. "Instead, they are using free cash flow to return capital to shareholders via increased buybacks and dividends". West Texas rose by 1% on Monday, a hike that adds up to 2.5% accumulated last week. "Investors haven't had much interest in oil-related equities, but we think the time has come now".