Oil traded near the highest level in almost four years as investors grapple with doubts over Opec’s ability to replace falling exports from Iran.
Futures rose 0.2 percent in New York after closing Monday at the highest since November 2014. Iranian crude and condensate exports declined to their lowest in 2 1/2 years before the impending return of US sanctions. Meanwhile, the new US-Mexico-Canada Agreement, which superseded the 24-year-old North American Free Trade Agreement, eased some concerns about global commerce.
“The market’s very keen to figure out the size of impact from the Iranian supply disruptions and whether Saudi Arabia and Russia are able to make up for the losses,” Kim Kwangrae, a commodities analyst at Samsung Futures Inc., said by phone. “At the same time, the US-Mexico-Canada Agreement is also improving the overall sentiment for oil.”
Crude has rallied about 16 percent since mid-August as supply losses from Iran to Venezuela continue to rattle global markets. The Organization of Petroleum Exporting Countries and its allies also show little enthusiasm for boosting output despite President Donald Trump’s demand for lower prices.
“It shows that the market is not convinced about the ability of the producers’ group to replace Iranian barrels,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London.
West Texas Intermediate for November delivery rose 17 cents to $75.47 a barrel on the New York Mercantile Exchange at 8:59 a.m. local time. The contract surged 2.8 percent to $75.30 on Monday. Total volume traded was about 19 percent below the 100-day average.
Brent for December settlement fell 19 cents to $84.82 a barrel on the London-based ICE Futures Europe exchange, after rising $2.25 to $84.98 on Monday. The global benchmark crude traded at a $9.60 premium to WTI for the same month.
Observed shipments of crude and condensate from Opec member Iran dropped to 1.72 million barrels a day in September, down 260,000 barrels a day from the previous month, according to tanker-tracking data compiled by Bloomberg. That’s the lowest since February 2016. With sanctions due to resume on November 4, the sharp drop-off in supply from the Persian Gulf state has helped buoy crude oil prices.
In the Americas, the new trade agreement was secured just before a Sunday midnight deadline, allowing leaders from the three nations to sign the deal by late November. While trade tensions still remain, the deal caps a turbulent time for the US and Canada, traditionally close allies on national security and trade.