- Brent crude posts biggest single-day rally since early-February.
- US crude reaches 7-week high, advancing 5.2% to $57.83 a barrel.
- Iran unlikely to ramp up oil exports until 2016, easing concerns about a flood of Iranian oil in the market.
The price of crude oil reached its highest level in more than a month on Monday amid signs of stronger Asian demand and expectations that an Iran nuclear deal won’t swamp the market with more crude despite Tehran’s intentions to boost oil exports.
Brent crude, the global benchmark, climbed 5.2 percent to $57.83 a barrel. That was Brent’s biggest single-day rally since early February.
US benchmark West Texas Intermediate (WTI) for May delivery was up more than 6 percent in the New York session. It would subsequently settle at $51.95 a barrel, up 5.6 percent to reach its highest level in seven weeks.
On Sunday Saudi Arabia announced plans to raise oil prices to Asia, a sign demand was gradually improving. Beginning in May, state-owned Saudi Aramco will reduce the discount of its Arab Light grade crude to 60 cents a barrel to the regional benchmark, the narrowest discount since December. The world’s biggest oil produced cut pricing to the United States by 10 cents and to Northwest Europe by 20 cents.
Meanwhile, concerns about a flood of Iranian oil eased on Monday as analysts reassured investors that it could take several months, perhaps even longer, for Iran to ramp up its crude exports.
The Islamic Republic reached a historic agreement with six world powers last week guaranteeing Tehran the right to enrich uranium for peaceful purposes. The proposed deal, which is intended to block Iran from developing nuclear weapons, will be finalized in June.
Tehran has expressed willingness to increase crude exports once sanctions against it are lifted. However, even if a deal is finalized by June, it will likely take Tehran until next year to increase its exports substantially. According to analysts, this will amount to an increase of 500,000 to 700,000 barrels a day.