Oil Prices Rise on Tightening Global Market Signs

Oil prices steadied below 3-1/2 year highs yesterday as resistance emerged in Europe and Asia to US sanctions against major crude exporter Iran, while rising USA drilling pointed to higher North American production.

This followed stepped up tension in the Middle East after the opening of the United States of America's Embassy in Jerusalem, Israel.

Iran produces roughly 4% of the world's oil, with the looming prospect of American sanctions set to cut off some of that supply.

At the current price, Nigeria generates $33.0 per barrel as excess revenue, amounting to $75.9 million per day.At the current oil price, the excess crude oil account is expected to reach $76 million per day, about 16.2 per cent, up from $65.4 million recorded in April, 2018.

USA crude prices are at the steep discount to Brent as a more than 25 percent rise in US crude production to 10.7 million barrels per day has left the American market well supplied.

Those data added to a healthy picture of global oil production as producers pounce on higher prices.

The bloc's forecasts pushed oil prices to new three-and-a-half-year heights, building on last week's rally. The gap between global and US oil prices widened as new figures showed that producers in the USA are ramping up quickly.

OPEC will discuss whether the production caps should be adjusted at a meeting next month. The US Energy Information Administration (EIA) is expected to release its estimates for US shale oil production in June late on Monday.

While the rising production figures are bearish clouds, "we're continuing to see the general momentum being brought forth, which has continued to point higher", said Ton Headrick, an analyst at CHS Hedging.

Prices for oil traded in London jumped to multi-year highs above $78 a barrel on Monday after U.S. President Donald Trump announced last week that Washington would reimpose the sanctions on Iran. Gasoline futures rose 0.52% to $2.2002 a gallon.

"The driving force behind the anticipated increase in global oil demand is likely based on expectations over stronger global economic growth", Lukman Otunuga, research analyst at FXTM, said.

"The issue of sanctions on Iran is likely to preclude any more pronounced price slide", Commerzbank analysts said in a note.

Referring to President Donald Trump's decision to withdraw from the Iran nuclear deal, OPEC said: "So far, the impact on the global economy has been minor and negligible, but the build-up of potentially disruptive concerns has increased".