In this 2007 file photo, an oil transit pipeline runs across the tundra to flow station at the Prudhoe Bay oil field on Alaska’s North Slope. AP
NEW YORK, United States – Oil prices bolted higher Monday on doubts last week’s nuclear agreement between Iran and global powers will soon lift crude supplies.
US benchmark West Texas Intermediate for May delivery jumped $3 to $52.14 a barrel on the New York Mercantile Exchange.
European benchmark Brent oil for May delivery gained $3.17 to $58.12 a barrel in London.
Oil prices had fallen Thursday on news of a framework agreed between Iran and international powers that paves the way for Tehran to curtail its nuclear activity in exchange for relief from punishing economic sanctions, including on oil investment.
BACKSTORY: Oil prices down on Iran deal
But by Monday, traders concluded the agreement would not have a near-term effect on crude supplies.
“There is a realization Iranian oil is not going to flow in the world market for quite some time,” said Bart Melek, head of commodity strategy at TD Securities.
Phil Flynn, an analyst with the Price Futures Group, said there are still many hurdles until sanctions are lifted. Such a move would require additional negotiations with Iran, as well as clearance from international weapons inspectors and some sort of resolution in the US legislature, where Republicans have balked at the agreement.
“It may be a year at the earliest that we will see that Iranian crude hit the market and by that time the oil glut should ease,” Flynn said.
The Iran deal is “headline bearish for oil prices,” said a Morgan Stanley note. “However, finalizing details by June will be difficult. Even if successful, little oil is expected by year-end.”
Analysts said the oil market also gained support from news that Saudi Arabia raised prices on crude shipments to Asia.
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