Oil prices inch up as sanctions loom

NEW YORK: Oil prices edged up on Thursday as the market weighed the risk of renewed U.S. sanctions on Iran and plunging Venezuelan output against a backdrop of strong demand, above all in Asia, the world's biggest oil-consuming region.

Global benchmark Brent crude futures were up 52 cents at $74.52 a barrel at 1:41 p.m. EDT (1741 GMT), while U.S. West Texas Intermediate (WTI) crude gained 2 cents to $68.07 a barrel.

"The turnaround from yesterday seems to be the re-pricing of geopolitical risk, especially of the United States potentially pulling out from the Iranian nuclear agreement," said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut.

A top adviser to Iran's supreme leader said Tehran would not accept any change to its nuclear deal, as Western signatories prepare a new package in the hope of persuading U.S. President Donald Trump to stick with the accord.

This comes a day after French President Emmanuel Macron said he expected Trump to pull out of the 2015 agreement.

Trump will decide by May 12 whether to restore the sanctions, which would probably result in a reduction of Iranian oil exports. Oil prices have gained about 6 percent this month thanks to expectations that the United States could do so.

"The rally seems to be intact and is looking for the next spark to push it higher. That spark could come from reinstituting sanctions. But not only is there the possibility of sanctions on Iran, but there's also the possibility of Venezuelan and Russian sanctions," Tradition Energy's McGillian said.

Venezuela's crude production has already tumbled from almost 2.5 million barrels per day (bpd) in early 2016 to around 1.5 million bpd.

The European Union said earlier this month it could impose further sanctions on Venezuela if it believes democracy is being undermined there.

Moscow is holding off on taking retaliatory measures against the United States for imposing sanctions on Rusal, hoping the EU can persuade Washington to ease restrictions against the world's second largest aluminum producer, sources told Reuters.

Trade data in Thomson Reuters Eikon shows seaborne imports of crude by Asia's main buyers will hit a record this month.

By end-April, China will likely have taken in more than 9 million bpd of crude - its most ever and nearly 10 percent of global consumption.

The equities market, with all three major indexes up, was also supporting oil, said Walter Zimmerman, chief technical analyst at United-ICAP.

"Crude needs help from the stock market to sustain any new highs," he said.

Meanwhile, U.S. production continued to grow, rising 46,000 bpd to 10.59 million bpd last week, government data showed on Wednesday.

Soaring U.S. output has made WTI crude around $6 per barrel cheaper than Brent and drawn exports to record highs of over 2 million bpd.