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Oil pushes higher on
worries over new U.S. sanctions on Iran
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 [February 03, 2017]
By Libby George
LONDON
(Reuters) - Oil prices edged higher on Friday in response to the
possibility of new sanctions on Iran after U.S. President Donald Trump
said "nothing is off the table" in dealing with the country after its
test launch of a missile.
Comments by Russian energy minister Alexander Novak that oil producers
had cut their output as agreed under a deal with OPEC, also helped to
support prices, analysts said.
Brent crude futures were up 30 cents to $56.86 a barrel by 1050 GMT,
after settling 24 cents lower at $56.56 in the previous session. Brent
was on track to gain more than 2 percent on the week, its first
significant weekly rise this year.
Front month U.S. West Texas Intermediate crude futures climbed 25 cents
to $53.79 a barrel, after ending 34 cents down on Thursday. For the
week, the contract is up a little over 1 percent.
Reuters reported on Thursday that the Trump administration is prepared
to roll out new measures against more than two dozen Iranian targets
following Tehran's ballistic missile test, according to sources familiar
with the matter.
"The 'trumperament' of the new U.S. president is being tested by Iran
and soon maybe also by Russia and China," Olivier Jakob, managing
director of consultancy PetroMatrix, said. "And that is adding some
geopolitical support to crude oil."
The sources, who had knowledge of the administration's plans, said the
package of sanctions was formulated in a way that would not violate the
2015 Iran nuclear deal.
Russia's Novak said that Russian companies might cut oil production more
quickly than required by its deal with Organization of the Petroleum
Exporting Countries (OPEC) late last year.
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Workers stand behind a yellow tape at a Pemex petrol station closed
due to fuel shortage, caused by a blockade of a storage site by
demonstrators protesting a gasoline price hike, at the border city
of Mexicali, Mexico, January 10, 2017. REUTERS/Stringer
He
said that 1.4 million barrels per day (bpd) was cut from global oil output last
month as part of the deal.
But analysts said oil's advance could run out of steam quickly. PVM Oil
Associates noted the market "is sandwiched between supportive OPEC-led output
cuts and the bearish impact of a resurgence in U.S. crude production."
The prospect of more oil output from Nigeria and also from other non-OPEC
producers such as Brazil also looms.
"Record speculative length threatens to trigger a sharp price fall as unease
builds amid the ongoing wait for a conclusive upside breakout," Commerzbank said
in a note.
(Additional reporting by Osamu Tsukimori in Tokyo and Keith Wallis in Singapore.
Editing by Jane Merriman)
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