Investing.com - Oil prices surged on Tuesday, hitting near six-month highs, after media reports that the U.S. would announce an end to sanction waivers on Iranian oil.
New York-traded West Texas Intermediate crude futures gained $1.31, or 2.0%, at $65.38 a barrel by 7:13 AM ET (11:13 GMT). That’s off an intraday peak of $65.80, its highest level since Oct. 31.
Brent crude futures, the benchmark for oil prices outside the U.S., traded up $1.68, or 2.3%, to $73.65. Monday’s intraday high of $74.31 was the most expensive since Nov. 1.
The U.S. had granted waivers to eight countries that purchase Iranian oil, giving them clearance to make limited purchases for an extended six month period.
Several media reports said on Sunday however that U.S. Secretary of State Mike Pompeo will announce a definitive end to that extension, implying a further tightening of supply.
Iran's biggest oil customers are China and India, who had both been lobbying for extensions to sanction waivers.
“U.S. President Donald Trump is doing his utmost to alleviate an upcoming summer squeeze on oil supply by playing to Saudi expectations in banning Iranian oil - while starting a new threat altogether to support a renegade Libyan general, just in case Riyadh doesn’t cooperate in cooling the crude rally,” Investing.com senior commodity analyst Barani Krishnan said.
Libya’s recent conflict has supported oil prices due to concerns that the OPEC member’s output of 1.2 million barrels per day could be at risk.
Krishnan indicated that Trump’s tactics are a means to pressure Saudi Arabia to ease production cuts as the president seeks lower prices at the pump as part of his 2020 campaign. Gasoline prices have risen 25% this year.
“If not to reciprocate the U.S. gambit on Iran, the Saudis might still find it wise to announce a freeze on production cuts to suppress Trump’s creativity in disrupting the oil market,” he said.
In other energy trading, gasoline futures gained 2.0% to $2.1135 a gallon by 7:15 AM ET (11:15 GMT), while heating oil advanced 1.3% to $2.0985 a gallon.
Natural gas futures traded up 0.7% at $2.553 per million British thermal unit.