U.S. oil cracks $70, dollar heads towards 2018 high

U.S. oil cracks $70, dollar heads towards 2018 high

US oil rose above $70 a barrel for the first time since November 2014 as traders braced for a re-imposition of USA sanctions on Middle East crude producer Iran.

"If Trump abandons the deal, he risks a spike in global oil prices", said Ole Hansen, head of commodity strategy at Saxo Bank, adding that reintroducing us sanctions could remove 300,000-500,000 bpd of Iranian oil from global supplies.

Iran has for months been preparing for the possibility that Trump will pull out of the nuclear agreement, Iranian President Hassan Rouhani said, adding that the United States would quickly come to regret such a decision.

Crude oil prices continue to rise today - both Brent and WTI are now registering gains.

While US President Donald Trump has threatened he would pull out of a deal between Iran and world powers as a Saturday deadline nears, he has signaled he would be open to negotiation. Member nations of OPEC and Russian Federation earlier engineered a large output cut lead by Saudi Arabia, which is seeking to push oil prices up to $80 a barrel to help fund its planned economic overhaul.

Analysts said a crisis in Venezuela, a major oil exporter, underpinned prices.

"It seems that the bureaucratic wheels are turning in Washington to prepare for a sanctions snapback", RBC Capital Markets analyst Helima Croft said in a note, adding that "the extraterritorial nature of US sanctions, which cover energy, shipbuilding, finance, trade, insurance, etc., means that.Iran's oil exports could credibly be curtailed by 200,000-300,000 bpd".

Six Indians abducted by armed men in Afghanistan's Baghlan
Zabihullah Mujahid , a spokesman for the Taliban, told Al Jazeera that the group was not involved in the attack. Gunmen grabbed them from a vehicle on the outskirts of the Baghlan provincial capital, Pul-e Khomri, on Sunday.

It does also need to be remembered that despite much of the risk premium heading into May 12 being focused on how the price of oil might react, there is going to be a threat of wider implications than oil supplies, if Trump does abandon the 2015 nuclear deal. Venezuela's oil output has halved since the early 2000s to just 1.5 million barrels per day (bpd), as the South American country has failed to invest enough to maintain its petroleum industry.

Crude at US$60 to US$65 a barrel is "suitable", an Iranian official said on Sunday, signaling a split with fellow OPEC member Saudi Arabia, which is said to be aiming for US$80 oil.

Shannon Rivkin, investment director of Australia's Rivkin Securities, said that oil prices had been driven up "thanks to growing concerns over the economic collapse of Venezuela and its oil industry, plus possible new sanctions against Iran from the Trump administration".

First, Oil Minister Bijan Zanganeh said over the weekend that Iran was all for a "reasonable" oil price, suggesting the current price level is unreasonable and the result of "manufactured tensions".

The oil price has rallied in part because traders expect sanctions to return.

But US output has soared by more than a quarter in the last two years, to 10.62 million bpd. USA energy companies added nine oil rigs looking for new production in the week to May 4, bringing the total count to 834, the highest level since March 2015, energy services firm Baker Hughes said last Friday.

U.S. output will likely rise further this year, towards or past Russia's 11 million bpd, as its energy firms keep drilling for more.

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