[NEW YORK] Oil prices jumped over 5 per cent on Monday as traders reassessed how quickly Iran might increase exports after a preliminary nuclear deal and anticipated that a months-long rise in US crude inventories may be slowing.
Brent crude tumbled nearly 4 per cent on Thursday after Iran and six world powers announced a framework agreement on the Opec member's nuclear program. But initial expectations of a quick recovery in oil exports were tempered by views that it could take longer than expected to roll back sanctions. "People betting on Iran's oil arriving tomorrow realize they may have to wait up to a year," said Phil Flynn, analyst at Price Futures Group in Chicago.
Oil extended gains after industry intelligence group Genscape reported that stockpiles at Cushing, Oklahoma, barely rose last week, according to traders. It would be the smallest increase since November at the delivery point for the US crude contract traded on the New York Mercantile Exchange.
Also supportive to the market was news that top exporter Saudi Arabia raised the prices for all the crude oil grades it will sell to Asia in May, raising prices a second straight month.
Concerns over conflict in Yemen supported prices, as fighting between a Saudi-backed coalition and Shi'ite Houthi forces continued.
Uncertainty remains about exactly when sanctions on Iran would be lifted if a deal is reached in June. "While clearly a bearish headline, a final deal and full lifting of sanctions still faces a number of obstacles," Morgan Stanley analysts said in a research note. "Even if a final deal is reached, we do not expect any physical market impact before 2016," the analysts said.