Crude declined after topping $66 a barrel last week as a key Russian pipeline began resuming shipments and global oil flows appeared undisturbed days before tougher U.S. sanctions against Iran kick in.
Futures slipped as much as 1.3% in New York on Monday. Russia said it solved an oil-contamination problem that halted some shipments to eastern Europe last week. Waivers that allowed China and several other major buyers to purchase Iranian oil will expire May 2, cutting off a significant source of supply. Meanwhile, U.S. President Donald Trump renewed calls on OPEC to pump more crude.
“We’re still getting weighed upon by the various commentary from President Trump and the calls on OPEC to raise output,” said John Kilduff, partner at Again Capital, a New York hedge fund focused on energy.
Crude touched a six-month high last week after the White House announced the end of sanctions exemptions on Iranian crude. Investors are waiting to see whether Saudi Arabia will ramp up production to make up for any supply shortfalls after Trump said on Twitter he had spoken with suppliers about boosting oil flows and that “all are in agreement.”
West Texas Intermediate for June delivery slid 38 cents to $62.92 a barrel at 9:47 a.m. on the New York Mercantile Exchange.
Brent for June settlement declined 32 cents to $71.83 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude was at a premium of $8.91 to WTI.
Saudi Energy Minister Khalid Al-Falih said last week that the world’s biggest oil exporter will cater to customers’ needs, but doesn’t see the need for an immediate response to the Iran situation.
“The U.S. president clearly on-boarded the Saudis before tightening the screws on Iran,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London. Ultimately, the kingdom will probably “lead efforts to prevent the oil market from over-tightening.”