Oil Gains as US-Saudi Talks Raise Risk of Iranian Crude Curbs

Oil Gains as US-Saudi Talks Raise Risk of Iranian Crude Curbs

Brent crude futures were up $1.42, or 2.1%, at $68.85 USA a barrel mid-morning Wednesday.

Analysts also pointed to the nomination of Mike Pompeo as new U.S. Secretary of State as a risk to oil markets, given he fiercely opposed the 2015 pact as a member of Congress.

West Texas Intermediate for May delivery added 6 cents to $63.60 a barrel on the New York Mercantile Exchange at 2:24 p.m.in Singapore.

Although Venezuela has been on the analytical community's warning radar for several years now, the more immediate impact on crude seems to be from the Middle East, due to the Saudis on Monday calling the 2015 nuclear deal between Iran and world powers a "flawed agreement" in advance of a meeting between Mohammed bin Salman, crown prince of Saudi Arabia, and the similarly-minded US president Donald Trump.

The compliance figures reflect both high adherence by top exporter Saudi Arabia and other Gulf OPEC countries, as well as an involuntary slide in production in Venezuela, whose output is dropping amid an economic crisis.

"Tensions between Saudi Arabia and Iran gave prices some support", Sukrit Vijayakar, director of energy consultancy Trifecta, said in a note.




Falls on global share markets helped cap gains.

Oil rebounded toward $63 a barrel from its first drop in four sessions as investors weighed record compliance to output curbs by OPEC and its allies against expanding U.S. supplies and a broader selloff in risk assets.

Output has climbed sharply in the United States, Canada and Brazil, as they ramp up production to benefit from higher crude prices that have been buoyed by the cuts made by the Organization of the Petroleum Exporting Countries, Russia and their allies. Still, investors will be wary of USA supplies, which have threatened to undermine OPEC's efforts to eliminate a global glut. Brent is the benchmark for several Middle East and other global crudes.

Perhaps the only fact-related influence over oil prices has to do with the likelihood of the US reimposing sanctions on Iran.

Looking at USA crude oil stocks, the most recent EIA figures (March 4) showed rising crude oil stocks and falling gasoline inventories.

The premium of Brent crude to WTI rose above $4 a barrel on Tuesday, its widest in a month.

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