2017.10.1603:26:00UTC+00Oil Markets Surge on Concerns of Fresh Iran Sanctions

Oil markets rallied on Monday on worries of possibly renewed U.S. implemented punitive actions against Iran, as well as the conflict in Iraq. Meanwhile, a U.S. oil rig explosion and lower exploration activity bolstered prices of U.S. oil.

Brent crude futures traded up 1.1 percent or 64 cents at $57.81 per barrel from the prior close. Prices of the international benchmark oil contract were supported by worries over renewed U.S. sanctions against Iran.

Last week, U.S. President Donald Trump refused to certify that Iran is complying with the deal despite international inspectors stating Tehran it is. Under the U.S. law, the president needs to certify every 90 days that Iran is fulfilling its part of the deal. Now, the Congress will have 60 days to rule whether it will hit economic sanctions on Tehran once more.

In the prior round of sanctions versus Iran, around one million bpd of oil supplies were cut off from global markets. Analysts do not expect the sanctions to have a significant impact, but they cautioned that a move would be disruptive.

Meanwhile, U.S. WTI crude futures traded at $51.89 per barrel, 44 cents or 0.9 percent higher from its prior closing.

U.S. drillers cut five oil rigs in the latest week, bringing the total number of rigs up to 743, the lowest since early June, which provided support for the U.S. benchmark.