Oil prices rise as Israel lines up Iran announcement

  • Oil pared early losses after Israeli Prime Minister Benjamin Netanyahu said he would make an announcement about the nuclear deal with Iran.
  • Brent prices have gained nearly 6 percent this month, buoyed by expectations the United States will renew sanctions against Iran.
  • Oil fell earlier in the day after a weekly report showed U.S. drillers added five oil rigs in the week to April 27.
A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.
Nick Oxford | Reuters
A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.

Oil steadied on Monday, reversing early losses after Israeli Prime Minister Benjamin Netanyahu said he would make an announcement later in the day about the nuclear deal with Iran.

Brent prices have gained around 6 percent this month, buoyed by expectations the United States will renew sanctions against Iran, which is the third-largest producer within OPEC.

U.S. President Donald Trump has until May 12 to decide whether to restore the sanctions on Iran that were lifted after an agreement over its disputed nuclear program.

Brent crude futures were down 19 cents on the day at $74.83 a barrel by 11:04 a.m. ET (1504 GMT), up from a session low of $73.47.

U.S. West Texas Intermediate (WTI) crude futures were up 21 cents at $68.31 a barrel, having recovered from an intraday low of $67.17.

Netanyahu will make a televised announcement at 1:00 p.m. ET (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 U.S. 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 prices are also drawing support from declining output in Venezuela, OPEC's biggest producer in Latin America, and Angola, Africa's second-largest exporter.

Oil fell earlier in the day after a weekly report showed U.S. 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 has grown by more than 25 percent since mid-2016 to a record 10.59 million barrels per day (bpd). Only Russia currently produces more, at around 11 million bpd.