Oil Up On Fresh Iranian Sanctions, But Market Trajectory Too "Foggy" To Predict

Growing prospects for Russia/Ukraine peace are keeping prices rangebound: File Image/Pixabay

Fresh U.S. sanctions on Iran targeting its oil industry were said to be a key reason why crude prices on Monday eked out modest gains, while perceptions that a ceasefire between Russia and Ukraine are within reach continued to influence trading.

Brent settled up 35 cents at $74.78 per barrel, and West Texas Intermediate settled up 30 cents to $70.70.

Washington imposed sanctions on more than 30 people and ships for their role in brokering the sale and transportation of Iranian oil under the so-called "shadow fleet,' part of U.S. president Donald Trump's effort to restore maximum pressure on the Islamic republic and mitigate its "malign influence abroad."

Tyler Richey, co-editor at Sevens Report Research, said the sanctions helped "WTI defend the psychological $70 level as we start the trading week," but in terms of trying to predict where the market will go next there is "just too much going on, [and] the crystal ball is foggy."

Robert Yawger, analyst at Mizuho, agreed: "Oil prices are in a wait-and-see mode, with plenty of major events that could influence the market at any moment."

Overall, analysts conceded that signs of supply tightness were becoming apparent, and that the premium of front-month Brent futures over the following month's contract reached its highest level since Feb 11.

In other oil news on Monday, Jason Prior, head of oil trading at Bank of America Corp., told media that the Organization of the Petroleum Exporting Countries (OPEC) may restore around 150,000 barrels per day (bpd) of production starting in April: "We expect some production to be brought back to market."

He noted that this was in the wake of Trump's appeals to OPEC to lower prices when they were just below $80 per barrel, and that they are now close to just $70.

Also on Monday, sources familiar with the matter told media BP is expected to announce this week that it will abandon its goal to boost renewable energy capacity generation 20-fold by 2030 and instead shift focus back to oil and gas, following on the heels of Shell and Equinor in Europe pivoting back to fossil fuel energy.

This falls in line with BP's chief executive Murray Auchincloss stating two weeks ago that "Building on the actions taken in the past 12 months, we now plan to fundamentally reset our strategy and drive further improvements in performance, all in service of growing cash flow and returns."