Oil prices on Monday fell away from last week's multi-year highs as a relentless rise in USA drilling activity pointed to increased output, while resistance emerged in Europe and Asia to US sanctions against major crude exporter Iran, Reuters reports.
President Donald Trump is set to announce Tuesday whether the US will waive sanctions against Iran as part of landmark nuclear agreement or exit the deal, a move that experts and officials have said could have a huge impact on oil and gas prices.
Brent crude futures were at $76.79 per barrel at 0229 GMT, down 33 cents, or 0.4 percent from their last close.
West Texas Intermediate crude for June delivery traded up 11 cents at $70.81 a barrel on the New York Mercantile Exchange at 8:40 a.m. local time.
While many Western firms were slow to enter the lucrative Iranian market, French oil company Total signed a $5 billion, two-decade joint venture with Iran and China last July to develop the South Pars offshore natural gas field, located in the Persian Gulf, as the Associated Press reported Monday.
Crude oil prices have increased more than $10/bbl this year, boosted by tensions in the Middle East and they could increase further following the Trump administration's withdrawal from the Iran nuclear agreement, according to analysts at Nomura.
Around a million barrels of oil a day is likely to disappear from global oil markets if the USA sanctions on Iran bite, said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
Contrastingly, Opec's latest report was more bullish.
Trump leaving the deal could undermine a 2015 agreement supported by allies of the United States in Europe, as well as Russian Federation and China.
Following a contraction in 2016, "non-Opec oil supply has seen a recovery in 2017 and 2018".
Flows to South Korea and Japan, which mainly consist of condensates, have declined in the past few months, as Iran has been consuming more volumes domestically at its Persian Gulf Star refinery, Platts said.
In China, the world's biggest oil importer, refinery runs rose almost 12 percent in April compared with the same month a year ago, to around 12.06 million barrels per day, marking the second-highest level on record on a daily basis, data showed on Tuesday. Despite these efforts to fill in for lost supply, analysts at Bank of America still expect oil to reach $100 per barrel in 2019.
On Wednesday, the IEA will publish its monthly oil market report.
In an executive memorandum issued to the Secretary of State, Secretary of Treasury and Secretary of Energy, the president said that after considering several factors such as the level of supply in the global market and in the US he made a decision to hit Iran in the pocketbook.
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