LONDON: Oil steadied on Monday, reducing early losses after Israeli Prime Minister Benjamin Netanyahu said he would make an announcement regarding the nuclear deal with Iran, later on today.
Brent prices have gained around 6 percent this month, as a result of the expectations of the United States planning to renew sanctions against Iran, which is the third-largest producer within OPEC.
The decision of whether to restore the sanctions on Iran that were lifted after an agreement over its disputed nuclear program will be made by US President Donald Trump on May 12.
Brent crude futures were last down 2 cents at $74.62 a barrel by 1422 GMT, up from a session low of $73.47.
US West Texas Intermediate (WTI) futures were last down 9 cents on the day at $68.01 a barrel, having recovered from an intraday low of $67.17.
Netanyahu will make a televised announcement at 1700 GMT in what his office said would be a “significant development” regarding the nuclear agreement with Iran.
Israel has long opposed the agreement. Washington’s major European allies have urged the Trump administration not to abandon it and argue that Iran is abiding by its terms.
The price of oil has risen to its highest since late 2014 this month, driven by concern over the potential for disruption to Iranian crude flows, but analysts say the degree of uncertainty hanging over the deal means the market is extremely sensitive to any developments.
“Until May 12, you’re not going to see any significant downard correction,” PVM Oil Associates strategist Tamas Varga said. “Reimposing US sanctions is not a foregone conclusion just yet.”
Fresh sanctions on Iran could result in a reduction of the country’s oil exports, which would strain global supplies even more, especially given the discipline of the Organization of the Petroleum Exporting Countries (OPEC) and their partners in sticking to an agreement to limit output.
“Things are not quite the same as in the previous decade, when Iran was regarded as a menace and a threat. Over the last three-four years Iran has behaved itself — according to everybody,” said Sukrit Vijayakar, director of energy consultancy Trifecta.
Oil fell earlier in the day after a weekly report showed US drillers added five oil rigs in the week to April 27, bringing the total count to 825, the highest since March 2015, General Electric’s Baker Hughes energy services firm said.
Crude production in the United States
Oil pares losses as Israel lines up Iran announcement
Oil pares losses as Israel lines up Iran announcement
