Oil hits 2019 high on U.S. plan to tighten squeeze on
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[April 22, 2019]
By Alex Lawler
LONDON (Reuters) - Oil topped $74 a barrel
on Monday, the highest since November, with the United States set to
announce a further clampdown on Iranian oil exports, tightening global
The United States is expected to say later on Monday that buyers of
Iranian oil need to end imports soon or face sanctions, a source
familiar with the situation said, confirming an earlier Washington Post
"This does bring a lot more uncertainty in terms of global supplies,"
said Olivier Jakob, analyst at Petromatrix. "It is a bullish surprise
for the market."
Brent crude, the global benchmark, rose as much as 3.3 percent to $74.31
a barrel, the highest since Nov. 1. It was up $1.94 at $73.91 at 0847
U.S. West Texas Intermediate crude climbed by as much as 2.9 percent to
$65.87, the highest since Oct. 31, and was last up $1.51 at $65.51.
In November, the U.S. reimposed sanctions on exports of Iranian oil
after President Donald Trump unilaterally pulled out of a 2015 nuclear
accord between Iran and six world powers.
Washington, however, granted waivers to Iran's eight main buyers -
China, India, Japan, South Korea, Taiwan, Turkey, Italy and Greece -
that allowed them to continue making limited purchases for six months.
U.S. Secretary of State Mike Pompeo is due make an announcement on
Monday, the Washington Post said.
Another drop in Iranian exports would further squeeze supply in a market
already tightened through the U.S. sanctions against Iran and fellow
OPEC member Venezuela, plus voluntary cuts led by the Organization of
the Petroleum Exporting Countries.
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An oil pump jack pumps oil in a field near Calgary, Alberta, Canada,
July 21, 2014. REUTERS/Todd Korol/File Photo
An end to the exemptions would hit Asian buyers hardest. Iran's biggest oil
customers are China and India, both of which have been lobbying for an extension
to the sanction waivers.
The prospect of reduced Iranian supply brought a cautious reaction from top OPEC
exporter Saudi Arabia, a key U.S. ally and also a driving force behind the
OPEC-led supply-cut deal.
A source familiar with Saudi thinking told Reuters on Monday Saudi Arabia is
willing to compensate for any potential loss of crude supply but the kingdom
will assess the impact on the market before raising its output.
Analysts at JBC Energy in Vienna see a Saudi supply boost as likely.
"It is now almost certain that additional volumes from Saudi Arabia from May
onwards will come back into the market," JBC said in a report.
(Additional reporting by Henning Gloystein; Editing by Kirsten Donovan)
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