Tokyo

US OIL has risen above US$70 a barrel for the first time since November 2014 as traders brace for a re-imposition of US sanctions on Middle East crude producer Iran.

Futures in New York and London jumped as much as 1.4 per cent.

While President Donald Trump has threatened that he will pull out of a deal between Iran and world powers as a May 12 deadline nears, he has also signalled that he would be open to negotiation.

The 2015 accord eased sanctions on Opec's third-largest member in exchange for curbs on its nuclear programme, and renewed American measures may stifle the Middle East country's crude exports.

Iran has come out against higher prices, after a rally of over 12 per cent this year on output cuts by the Organization of Petroleum Exporting Countries and its allies as well as rising geopolitical risks in the Middle East.

Crude at US$60 to US$65 a barrel is "suitable", an official from the Opec producer said on Sunday, signalling a split with fellow group member Saudi Arabia that is said to be aiming for US$80 oil.

The cartel will meet next month in Vienna. "Fresh sanctions, which would remove some of Iran's crude supplies from the global market, will tighten the balance between demand and supply and support crude prices," Takayuki Nogami, chief economist at state-backed Japan Oil, Gas & Metals National Corp, said by phone from Tokyo.

"While there could be profit-taking given current oil prices, it will be limited as concerns over Iran are rising," he added.

West Texas Intermediate oil for June delivery climbed as much as 97 cents to US$70.69 a barrel on the New York Mercantile Exchange, and traded at US$70.41 at 2:53 pm on Monday in Singapore.

Total volume traded was about 61 per cent above the 100-day average. Prices rose 2.4 per cent last week. Brent for July settlement rose 68 cents to US$75.55 a barrel on the London-based ICE Futures Europe exchange.

Prices climbed 0.3 per cent last week. The global benchmark crude, which is also on course for the highest close since November 2014, was at a US$5.29 premium to July WTI.

Yuan-denominated futures for September delivery rose 2.9 per cent to 460 yuan per barrel on the Shanghai International Energy Exchange. The contract climbed 0.6 per cent last week.

While refusing to reveal what he will do by May 12, Mr Trump repeated his belief that the existing accord is "a horrible agreement for the United States".

But, he added, "That doesn't mean I wouldn't negotiate a new agreement."

Meanwhile, America's European allies continue to back the deal, saying it has been essential to reining in Iran's nuclear programme.

Iran has been preparing for months for the possibility that Mr Trump will pull out of the nuclear agreement, President Hassan Rouhani said, warning that the US would quickly come to regret such a decision.

The constant fluctuation in oil prices is destabilising for future investment and security of supply, Iranian oil minister Bijan Namdar Zanganeh said.

Energy market consultant FGE has said that sanctions on Iran could cut its output by up to 500,000 barrels a day by the end of this year.

Since sanctions were eased as of January 2016, Iran's crude production has almost doubled, while exports soared to record levels last month. BLOOMBERG