Oil Jumps as U.S. Plans to End Iran Waivers After May 2 Expiry

Apr 22 2019, 2:32 AMApr 22 2019, 2:50 AMApril 22 2019, 2:32 AMApril 22 2019, 2:50 AM

(Bloomberg) -- Oil rose to the highest in almost six months as the U.S. government was said to eliminate sanction waivers that allowed buyers to import Iranian crude.

Futures in London jumped as much as 2.5 percent to the highest intraday price since early November. Secretary of State Mike Pompeo will deliver the decision Monday that no waivers from sanctions will be renewed to countries for Iranian oil, according to four people familiar with the matter. The U.S. will also announce offsets through commitments from other suppliers such as Saudi Arabia and the United Arab Emirates.

Oil has rallied almost 40 percent this year as the Organization of Petroleum Exporting Countries and its allies including Russia continued their commitment to curb output. U.S. sanctions on Iranian and Venezuelan oil exports, along with unintended losses in Libya, have further squeezed supplies. Signs of slowing production in the U.S. and disruption at a key Nigerian pipeline are also bolstering bullish sentiment.

“Prices are rallying as expectations are growing that global supply will be immediately curtailed with the U.S. said to be scrapping its Iran oil waivers,” said Kim Kwangrae, a commodities analyst at Samsung Futures Inc. in Seoul. “That’s coming on top of the dialing back of U.S. explorers.”

Brent for June settlement climbed as much as $1.80 to $73.77 a barrel on the London-based ICE Futures Europe exchange and was at $73.56 a barrel at 10:29 a.m. in Singapore. The contract rose 35 cents on Thursday, capping a fourth weekly advance. No futures were traded in London or New York on Friday due to the Good Friday holiday.

West Texas Intermediate for May delivery, which will expire Monday, rose as much as $1.39 to $65.39 a barrel on the New York Mercantile Exchange while the more-active June contract gained 2 percent to $65.32. WTI was at a discount of $8.20 to Brent for the same month.

Further gains in oil prices hinge on Russia’s stance on the output reduction pact, Samsung Futures’ Kim said. Russian Energy Minister Alexander Novak said last week that it’s too early to talk about possible options for the group with regards to the future of the output cuts. He said there would likely be discussions about whether OPEC and its allies would extend production cuts at their meeting in Jeddah next month.