SINGAPORE (Reuters) – Oil prices rose to their highest levels since Nov. 2018 on Monday, driven up by OPEC’s ongoing supply cuts and U.S. sanctions against Iran and Venezuela.
FILE PHOTO: Storage tanks are seen at Ecopetrol’s Castilla oil rig platform, in Castilla La Nueva, Colombia June 26, 2018. REUTERS/Luisa Gonzalez/File Photo
International benchmark Brent futures were at $70.67 per barrel at 0022 GMT on Monday, up 33 cents, or 0.5 percent from their last close.
U.S. West Texas Intermediate (WTI) crude were up 33 cents, or 0.5 percent, at $63.41 per barrel.
Brent and WTI both hit their highest levels since November last year at $70.76 and $63.48 per barrel, respectively, early on Monday.
“Brent prices increased more than 30 percent year-to-date as OPEC+ continued to cut supply for 4 months in a row and optimism over U.S.-China trade talks helped to buoy the demand outlook,” U.S. bank J.P.Morgan said in a note released over the weekend.
Energy consultancy FGE said the OPEC-led supply cuts meant “excess inventories are disappearing and the market looks healthy,” adding that “the market is poised for prices to rise to $75 per barrel or higher” for Brent.
Oil prices have also been driven up by U.S. sanctions against OPEC-members Iran and Venezuela.
“Sanctions can cut 500,000 bpd of Venezuelan exports. Add that to a cut in Iran waivers and prices can rise substantially,” FGE said.
There remain, however, some factors that could bring prices down later this year.
Russia is a reluctant participant in its agreement with OPEC to withhold output, and Russian oil production may increase again if a deal with the producer club is not extended once it expires before July 1, Energy Minister Alexander Novak said on Friday.
Russian oil output reached a record high of 556 million tonnes, or 11.16 million barrels per day (bpd), last year.
In the United States, crude oil production reached a record 12.2 million bpd in late March.
U.S. crude exports have also risen, breaking through 3 million bpd for the first time earlier this year.
“With the new Permian pipelines (from July), we can see a boost of 500,000 to 600,000 bpd in U.S. exports,” FGE said.
Reporting by Henning Gloystein; editing by Richard Pullin
