Oil Extends Gains On Iran Chaos As New Venezuela Oil Flows Are Ratified

It's unclear whether supply tightness or a glut is impending: File Image/Pixabay

Oil on Monday continued its modest winning streak, once again buoyed by Iran, this time with its clerical rulers reportedly killing hundreds of anti-government demonstrators – exactly the action U.S. president Donald Trump warned would trigger violent U.S. intervention.

As various pundits contemplated the possibility of a more moderate leadership taking power, Brent settled up 53 cents at $63.87 per barrel; West Texas Intermediate settled up 38 cents at $59.50.

Data from Kpler and Vortexa showed that Iran has about 50 days of oil output on the water (due to China purchasing less because of the U.S. sanctions) and Tehran is attempting to protect it from possible U.S. military strikes.

Meanwhile, Trump on Monday said on social media that he had ordered 25 percent tariffs against any country doing business with Iran, and this prompted Alex Pierce, commodity analyst at Schneider Electric, to remark, "Although Iranian authorities have claimed the situation is under control, market sentiment remains cautious...even short-term escalation could disrupt flows or increase insurance costs for shipments through the Gulf [of Hormuz]."

Countering the notion that the situation might lead to near-term supply tightness was Venezuela, where Washington was busy organizing the rerouting of up to 50 million barrels of sanctioned oil to the U.S. instead of China, following the ouster of Venezuelan president Nicolas Maduro.

Vitol and Trafigura were granted licenses to trade Venezuelan oil; sources say they are offering  crude to refiners in China and India for March delivery, as well as providing logistical and marketing services to facilitate the sale.

Monday's crude trading was also said to be supported by China: according to Kpler data, that country's crude imports in December increased by 10 percent m/m to a record 12.2 million barrels per day (bpd) due to the rebuilding of its crude inventories.