Crude oil price was near $70 a barrel as supply risks from Saudi Arabia to the U.K. threaten to strain global markets. Futures in New York were little changed after climbing 2.1 per cent Monday, the biggest gain in more than a month. A strike hit production at Total SA’s three oil fields in the North Sea, and concerns remain over Saudi Arabia’s suspension of crude shipments through a key Sea transit route following attacks by Yemeni rebels.
Crude is poised for the biggest monthly loss in a year as simmering trade tensions between the U.S. and China pushed prices lower at a time when American shale output continues to surge. Still, falling production due to economic woes in Venezuela, a civil war in Libya and impending American sanctions on Iranian oil have raised fears over a global supply crunch. Barclays Plc warned of “significant upside risk” for prices as sanctions begin to bite Iranian exports. Meanwhile, President Donald Trump said Monday he’d meet his Iranian counterpart without preconditions following a war of words earlier this month. The White House appeared to quickly walk back on his comments and signaled the U.S. will end sanctions on Iran if the Islamic Republic’s behavior changes.
“A strike in the North Sea, along with persisting concerns of supply disruptions from Libya and Venezuela to Iran, is one of the factors boosting oil prices,” said Satoru Yoshida, commodity analyst at Rakuten Securities Inc. in Tokyo. “While we have some bearish factors, including rising U.S. oil production, a trade war between the U.S. and China isn’t drastically escalating, and that sense of relief is supporting prices.” West Texas Intermediate crude for September delivery traded at $69.87 a barrel on the New York Mercantile Exchange, down 26 cents, at 8:19 a.m. in London. The contract is on course for a 5.8 percent decline this month, which would be the biggest such drop since August 2017. Total volume traded was about 37 percent below the 100-day average.
Brent for September settlement, which expires Tuesday, fell 24 cents to $74.73 a barrel on the London-based ICE Futures Europe exchange. The contract is down 5.9 percent this month. The more-actively traded October contract lost 25 cents to $74.72. The global benchmark traded at a $4.86 premium to September WTI. Futures for September delivery climbed 0.7 percent to 513.2 yuan a barrel on the Shanghai International Energy Exchange. The contract added 0.6 percent on Monday.
Trump said at a press conference he would be willing to meet Iranian President Hassan Rouhani about a week after he warned of unspecified “consequences” if the Persian Gulf nation continues threatening the U.S. Still, hours after Trump’s comments, Secretary of State Michael Pompeo laid out preconditions for the meeting between U.S. and Iranian leaders. Meanwhile, the risk of potential supply disruptions elsewhere remain. Saudi Arabia’s tankers altered course after the kingdom last week took the extraordinary measure of temporarily halting oil shipments via the Bab el-Mandeb Strait, a key shipping lane for crude at the southern tip of the Red Sea. The move came after the kingdom said two tankers were attacked by Yemen’s Houthi militia.
In the British North Sea, workers started shutting down production at Alwyn, Dunbar and Elgin fields ahead of industrial action that was scheduled to begin on Monday. No talks are currently planned with Total, which operate the fields, according to union regional officer Wullie Wallace.