Oil Settles Higher on Monday

OLD BRIDGE, N.J. (DTN) -- Oil futures nearest to delivery traded on the New York Mercantile Exchange (NYMEX) and Brent crude on the Intercontinental Exchange (ICE) settled higher amid reports that the U.S. could impose even tougher sanctions on Iran and possibly new sanctions on Venezuela. Buying was also heightened ahead of Tuesday's expiration of the June West Texas Intermediate (WTI) crude oil contract, traders said.

At the 2:30 p.m. ET settle, NYMEX June West Texas Intermediate crude oil futures were up 96 cents to $72.24 barrel (bbl), while the July contract, which becomes the spot contract Tuesday at 2:30 p.m. ET close, rose 98 cents to $72.35 bbl. ICE July Brent settled at $79.22 bbl, up 71 cents.

NYMEX June RBOB futures settled 2.32 cents higher at $2.2565 gallon while the June ULSD contract settled up 0.83 cents at $2.2738 gallon.

In a speech before the Heritage Foundation Monday, U.S. Secretary of State Mike Pompeo said the Trump administration would impose "unprecedented financial pressure in the form of the strongest sanctions in history" unless the Islamic Republic renounced all its nuclear activities, its ballistic missile program, and its support of regional proxies.

News reports continue to circulate that the Trump administration may impose additional sanctions on Venezuela following Sunday's elections. Washington could restrict insurance on Venezuelan oil shipments or ban American sales of light oil used to blend with Venezuela's heavy oil to prepare it for export. A ban on imports of Venezuelan oil altogether is less likely, although possible, reports said.

Recent reports from industry watchdog International Energy Agency (IEA) highlighted a steep drop in Venezuela's crude production, with output at the lowest point in decades outside of production loss during the 2002-03 strike. OPEC, citing secondary sources, reported Venezuela's crude production averaged 1.436 million barrels per day (bpd) in April, down 531,000 bpd or 27% against year prior.

Recently, ConocoPhillips seized cargoes at a refinery it leases in Curacao and various storage facilities in Aruba, Bonaire and St. Eustatius to enforce a $2 billion arbitration ruling against the state oil company, Petroleos de Venezuela, known as PDVSA. The facilities were used to blend Venezuelan heavy crude with lighter oils, and the port in Curacao was able to dock the largest tankers that typically send crude and other fuels across the Pacific.

Brian Whary can be reached at brian.whary@dtn.com