NEW YORK: Oil prices edged up about 2 percent to a two-week high in volatile trade on Monday as worries over supply disruption from the Iran war offset a report the US had agreed to waive sanctions on Iranian crude during talks.
Brent futures rose USD2.15, or 2.0 percent, to USD111.41 a barrel at 12:30 p.m. EDT (1630 GMT), while US West Texas Intermediate (WTI) crude rose USD1.98, or 1.9 percent, to USD107.40.
After rising and falling more than USD2 a barrel in volatile trading on Monday, Brent was on track for its highest close since May 4 and WTI was on track for its highest close since April 7.
Last week, both contracts jumped more than 7 percent as hopes dimmed for a peace deal to end the almost total closure of the Strait of Hormuz, through which about 20 percent of the world’s oil supply passes. Fatih Birol, head of the International Energy Agency (IEA), said that commercial oil inventories were depleting rapidly with only a few weeks’ worth left due to the conflict and the closure of the Strait to shipping. Birol, who is participating in the Group of Seven finance leaders meeting in Paris, told reporters that the release of strategic reserves had added 2.5 million barrels of oil per day to the market, but they were “not endless”.
“We feel that progress toward a diplomatic solution to the US/Iran war is little changed from around the middle of March when nearby WTI was about where it is now,” analysts at energy advisory firm Ritterbusch and Associates said in a note.
“Despite the continuation of the war … a re-opening of the Strait of Hormuz anytime soon remains highly uncertain. With each day that the Strait is closed, global oil markets will tighten further,” Ritterbusch said. Iran’s semi-official news agency Tasnim said it was told by a source close to the negotiation team that unlike its previous texts, the Americans had accepted in the new text to waive Iran’s oil sanctions during the period of talks.
Peace mediator Pakistan has shared with the United States a revised proposal from Iran to end the war in the Middle East, a Pakistani source told Reuters on Monday, warning that the sides “don’t have much time” to narrow their differences.
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