Investing.com - Oil prices reached a fresh 2019 high on Tuesday, after the White House confirmed it will not extend waivers for countries that it had previously allowed to purchase Iranian crude.
New York-traded West Texas Intermediate crude futures gained 41 cents, or 0.6%, at $65.96 a barrel by 6:54 AM ET (10:54 GMT). That’s off an intraday peak of $66.19, its highest level since Oct. 31.
Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., traded up 24 cents, or 0.3%, to $74.28. Tuesday’s intraday high of $74.69 was the most expensive since Nov. 1.
“We will no longer grant exemptions,” U.S. Secretary of State Mike Pompeo said on Monday, paving the way for Washington to begin imposing economic penalties against companies or financial institutions that purchase Iranian oil when current waivers expire on May 2.
Most analysts expect the move to further tighten supply, pushing prices higher, although Pompeo insisted that the U.S. has been in “constant discussions with allies and partners” to find an alternative source of oil.
Markets seemed unconvinced by U.S. President Donald Trump’s insistence that Saudi Arabia and others in OPEC will increase production to replace the supply lost from American sanctions on Iranian oil.
“Trump expects OPEC+ members to quickly reverse their production cuts, as well as replace lost barrels from Iran and other sources such as Venezuela and Libya,” Investing.com senior commodity analyst Barani Krishan said. “Riyadh stopped short of giving such assurance.”
Saudi Arabia’s energy minister Khalid Al-Falih did say the kingdom will coordinate with other crude producers to ensure that adequate supplies are available and the market “does not go out of balance”, still falling short of a pledge to make up the lost supply.
“Trump (is) very sure that GCC (Gulf Cooperation Council) will make up lost barrels but that's NOT what Khalid al Falih said AT ALL,” Ellen Wald, non-resident senior fellow at the Global Energy Center of the Atlantic Council, tweeted. “Saudi Arabia isn't going to hamstring itself in OPEC by committing to a certain number of barrels.”
Lastly, natural gas futures traded up 0.4% at $2.567 per million British thermal unit.
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