Oil Climbs as Iran Confronts Trump's Critique of Nuclear Accord
(Bloomberg) -- Crude advanced as Iran intensified criticism of U.S. President Donald Trump’s stance on the 2015 nuclear deal and said the Islamic Republic won’t renegotiate the accord.
Futures in New York closed 0.7 percent higher on Thursday after trading lower during the morning. A bearish U.S. government tally of crude and gasoline surpluses was overshadowed by Iranian Foreign Minister Mohammad Javad Zarif’s accusation of the U.S. “bullying” and saying Trump should abide by the deal.
“You have the foreign minister this morning retaliating,” said Michael Loewen, a commodities strategist at Scotiabank in Toronto. “That geopolitical risk premium is starting to eat higher here. It’s pretty hard to step in and get bearish on crude oil in this sort of environment when there are so many uncertainties when it comes to this Iran deal.”
An unraveling of the nuclear accord could mean a re-imposition of U.S. sanctions on Iran, potentially disrupting crude supplies from OPEC’s No. 3 producer. Tension has mounted as a May 12 deadline for Trump to decide what to do approaches. Zarif said in a video posted to his Twitter account that there is “only one way forward and it’s U.S. compliance, not appeasement.”
West Texas Intermediate crude for June delivery rose 50 cents to settle at $68.43 a barrel on the New York Mercantile Exchange. Total volume traded Thursday was 2 percent below the 100-day average.
Brent crude for July settlement added 26 cents to end the session at $73.62 on the London-based ICE Futures Europe exchange. The global benchmark crude was at a $5.36 premium to July WTI.
“Iran is committed to the nuclear deal but if the U.S. backs off” from the accord “we won’t stay either,” Ali Akbar Velayati, adviser to Iran’s Supreme Leader Ayatollah Ali Khamenei, was quoted by state-run Mehr news agency as saying Thursday.
Geopolitical flare-ups and OPEC-led production caps pushed crude to three-year highs last month, even as output from American fields bloomed. U.S. drillers have been lifting production almost non-stop since early October and last week pumped a record 10.62 million barrels a day.
Much of that production growth has been happening in the Permian Basin of West Texas and New Mexico, where a dearth of pipeline capacity created a local supply bottleneck that depressed regional prices. Oil sourced in the Texas town of Midland traded at a $12 discount to supplies from the major storage hub in Cushing, Oklahoma, the widest since 2014, data compiled by Bloomberg showed.
Other oil-market news:
- Gasoline futures rose 0.4 percent to settle at $2.0875 a gallon on Thursday.
- OPEC shipments will drop to 24.9 million barrels a day in the four weeks to May 19 compared with the period to April 21, tanker-tracker Oil Movements said in its weekly report.
- The flow of Brent crude oil to an export terminal in Scotland was halted this week, a development that will further erode already weak shipments from the North Sea.
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