Oil prices rose Monday as tensions in the Middle East and concerns about U.S. policy in the region added to gains at the end of last week.
U.S. President Donald Trump's threat to end a 2015 nuclear agreement with Iran, as well as tensions between the Iraqi central government and the Kurdish semiautonomous region, sparked concern among investors of possible disruption in future oil supplies.
Continue Reading Below
"It's something you can't ignore," said Mark Benigno, co-director of energy trading at INTL FCStone. "There's a little premium being put in the market based on whether there would be any flow disruption."
U.S. crude futures rose 42 cents, or 0.82%, to $51.87 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 65 cents, or 1.14%, to $57.82 a barrel on ICE Futures Europe.
Mr. Trump's announcement could lead to the nuclear deal's eventual collapse, analysts said. The U.S. Congress has the option of reinstating sweeping energy and financial sanctions against Iran.
Meanwhile, Iraqi forces clashed with Kurdish fighters in the oil-rich province of Kirkuk early Monday, Iraqi and Kurdish officials said.
"It is the first time since 2014 that we have had geopolitical risk add a premium to the oil price in a reflection that the oil market is getting tighter," said Bjarne Schieldrop, chief commodities analyst at SEB Markets.
Oil prices turned positive toward the end of last week following data that showed a larger-than-expected fall in weekly U.S. crude oil inventories. That was buttressed by Baker Hughes data that showed the number of active U.S. rigs drilling for oil fell by five to 743 last week, after posting a fall of two rigs in the previous week.
Oil markets were also getting a boost from broader risk-on sentiment in markets, said Ric Spooner, chief market analyst at CMC Markets. That has lifted other so-called riskier assets, such as equities, as investors respond to positive economic data around the world.
The near-term outlook for crude oil prices has, in general, turned more optimistic with Russia and Saudi Arabia recently signaling that they will work to extend a continuing oil production cap beyond March next year, he added.
Gasoline futures rose 0.63 cent, or 0.39%, to $1.6091 a gallon. Diesel futures rose 2.36 cents, or 1.31%, to $1.8206 a gallon.
Alison Sider contributed to this article.
Write to Biman Mukherji at email@example.com and Neanda Salvaterra at firstname.lastname@example.org
(END) Dow Jones Newswires
October 16, 2017 18:10 ET (22:10 GMT)