Oil hits 2019 high
Oil topped $74 a barrel on Monday, the highest in November, as the United States had to announce a further clampdown on Iranian oil exports, tightening global supplies.
The United States is expected to say later on Monday that buyers of Iranian oil should soon end importing or face sanctions.
“This does bring a lot more uncertainty in terms of global supplies,” said Olivier Jakob, analyst at Petromatrix. “It is a bullish surprise for the market.”
US Secretary of State Mike Pompeo has to make a statement on Monday, the Washington Post said.
Another decline in Iran’s exports will lead to a further squeeze supply in a market already tightened through US sanctions against Iran and the other side of OPEC member Venezuela, plus voluntary cuts led by the Organization of Petroleum Exporting Countries.
An end to the exemptions will hit hardest Asian buyers. Iran’s largest oil customers are China and India, both lobbying for an extension to the sanctions waivers.
The prospect of a reduction in Iranian supplies has brought a cautious reaction from the leading top OPEC exporter Saudi Arabia, a key ally in the United States, as well as a driving force behind OPEC-led supply-cut deal.
A source familiar with Saudi thinking told Reuters that Saudi Arabia is ready to compensate any potential loss of crude oil supply, but the kingdom will assess the impact on the market before increasing its output.
Analysts at JBC Energy in Vienna see a Saudi supply boost as likely.
“It is now almost certain that additional volumes from Saudi Arabia from May onwards will come back into the market,” JBC said in a report.