Oil near 2014 highs on Iran tensions, Venezuela crisis

File photo showing an oil refinery in North Dakota, USA, on Sept 6, 2017. PHOTO: AFP

SINGAPORE (REUTERS)- Oil markets were steady on Monday (May 7), with prices near late-2014 highs as a decision looms on whether the United States walks away from a deal with Iran and instead re-imposes sanctions on Tehran.

Brent crude oil futures were at US$74.87 per barrel at 0117 GMT, unchanged from their last close.

US West Texas Intermediate (WTI) crude futures up 4 cents, at US$69.76 per barrel. WTI on Friday hit its highest level since November 2014.

Iran re-emerged as a major oil exporter in 2016 after international sanctions against it were lifted in return for curbs on Iran's nuclear programme.

Expressing doubts over Iran's sincerity, Mr Trump has threatened to walk away from the 2015 agreement by not extending sanctions waivers when they expire on May 12, which would likely result in a reduction of Iran's oil exports.

Analysts also warned about ongoing economic crisis in oil producing Venezuela.

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."

US oil firm ConocoPhillips has moved to take the Caribbean assets of Venezuela's state-run PDVSA to enforce a US$2 billion arbitration award, actions that could further impair PDVSA's declining oil production and exports.

Venezuela's oil output has halved since the early 2000s to just 1.5 million bpd, as the country has failed to invest enough to keep its production and refinery facilities maintained.

Despite Venezuela's woes Greg McKenna, chief market strategist at futures brokerage AxiTrader, said "the big story this week is going to be about oil and the Iran Nuclear deal."

Most market participants expect Mr Trump to withdraw from the pact, he said.

Some traders, however, are becoming cautious about ever higher oil prices.

Hedge funds cut their net long US crude futures and options positions in the week to May 1 by 11,825 contracts to 444,060, according to the US Commodity Futures Trading Commission.

Looming over markets is surging US output, which has soared by more than a quarter in the last two years, to 10.62 million barrels per day.

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

US 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.

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