Crude Oil Prices Sidestep Bearish Iran Comments on OPEC Cuts to Settle Higher

Investing.com – Crude oil prices settled higher on Monday as investors weighed bearish comments from Iran concerning an extension to the output-cut agreemnt against a drop in global oil supplies.

On the New York Mercantile Exchange for June delivery rose 24 cents to settle at $68.64 a barrel, while on London’s Intercontinental Exchange, rose 0.97% to trade at $74.80 a barrel.

Sentiment on an extension to the output-cut agreement were dented somewhat after Iran’s oil minister Bijan Zanganeh claimed that a continued rise in crude oil prices would nullify the need to extend the OPEC-lead deal.

Zanganeh confirmed Iran was exporting just over 2.5 million barrels per day, which is around a 30% increase from March levels, Bloomberg reported.

This comes as growing investor expectations the U.S. was set to impose new Iranian sanctions in May, limiting the country’s oil output, paving the way for an extended rally in crude prices.

“New Iranian sanctions in May would likely be the catalyst needed to encourage long-term buyers to revisit US E&P’s in a more serious way and could lead to materially higher oil prices, erase the backwardation in crude and provide a path for prices to stay elevated for quite some time,” said NatAlliance Securities Energy Specialist Leo Mariani.

The output agreement is close to ridding the market of excess supplies of crude, which stood at just 12 million barrels above the five-year average, Reuters reported last week, citing a source familiar with the matter.

In November 2016, OPEC and other producers, including Russia agreed to cut output by 1.8 million barrels per day (bpd) to slash global inventories to the five year-average. The OPEC-led deal was renewed last year through 2018.

Also supporting sentiment on crude prices was a slight disruption in global crude supplies after Bloomberg reported that rebels attacked Libya’s Waha oil pipeline on Sunday, which knocked 80,000 barrels per day offline.

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