Oil markets jumped on Monday on concerns over potential renewed U.S. sanctions against Iran as well as conflict in Iraq, while an explosion at a U.S. oil rig and reduced exploration activity supported prices there.
International Brent crude futures were at $57.82 at 0645 GMT, up 65 cents, or 1.1 percent, from the previous close.
Prices were being pushed up by worries over renewed U.S. sanctions against Iran.
Under U.S. law, the president must certify every 90 days that Iran is complying with the deal. Congress will now have 60 days to decide whether to reimpose economic sanctions on Tehran.
During the previous round of sanctions against Iran, around 1 million barrels per day (bpd) of oil supplies were cut off global markets. While analysts said they did not expect renewed sanctions to have such a big impact again, especially as the United States would likely act alone, they did warn that such a move would be disruptive.
There were also concerns about the stability of Iraq, the second biggest oil producer within the Organization of the Petroleum Exporting Countries (OPEC) behind Saudi Arabia.
Iraqi forces on Sunday began moving towards oil fields and an important air base held by Kurdish forces near the oil-rich city of Kirkuk, Iraqi and Kurdish officials said.
Greg McKenna, chief market strategist at futures brokerage AxiTrader said that “Trump’s reopening of the Iran nuclear issue, (and) the ongoing threat of the Kurdish pipeline being cut off” were the main factors pushing up oil prices.
U.S. OIL RIG EXPLOSION
An explosion overnight at an oil rig in Louisiana’s Lake Pontchartrain drew market attention, with at least six people injured.
U.S. crude prices were further supported by drillers cutting back the number of rigs looking for new production.
U.S. West Texas Intermediate (WTI) crude futures were at $51.89 per barrel, up 44 cents, or 0.9 percent.
Drillers cut five oil rigs in the week to Oct. 13, bringing the total count up to 743, the lowest since early June, General Electric Co’s Baker Hughes energy services firm said late on Friday.
On the demand side, oil consumption has been strong, especially in China, where the central bank governor said on Monday that the economy is expected to grow by 7 percent in the second half of this year, accelerating from a forecast-beating 6.9 percent in the first six months and defying widespread expectations for a slowdown.