Oil prices hit five-month highs on OPEC supply cuts, U.S. sanctions

Oil prices rose to their highest levels since November 2018 on Monday, driven up by OPEC's ongoing supply cuts and U.S. sanctions against Iran and Venezuela.

International benchmark Brent futures were at 70.67 U.S. dollars per barrel at 0022 GMT on Monday, up 33 cents, or 0.5 percent from their last close.

U.S. West Texas Intermediate (WTI) crude was up 33 cents, or 0.5 percent, at 63.41 U.S. dollars per barrel.

Brent and WTI both hit their highest levels since November last year at 70.76 U.S. dollars and 63.48 U.S. dollars per barrel, respectively, early on Monday.

Brent prices increased more than 30 percent year-to-date as OPEC+ continued to cut supply for four months in a row and optimism over U.S.-China trade talks helped to buoy the demand outlook, U.S. bank J.P. Morgan said in a note released over the weekend.

Energy consultancy FGE said the OPEC-led supply cuts meant excess inventories are disappearing and the market looks healthy, adding that the market is poised for prices to rise to 75 U.S. dollars per barrel or higher for Brent.

Oil prices have also been driven up by U.S. sanctions against OPEC-members Iran and Venezuela.

Sanctions can cut 500,000 bpd of Venezuelan exports. Add that to a cut in Iran waivers and prices can rise substantially, FGE said.

There remain, however, some factors that could bring prices down later this year.

Russia is a reluctant participant in its agreement with OPEC to withhold output, and Russian oil production may increase again if a deal with the producer club is not extended once it expires before July 1, Energy Minister Alexander Novak said on Friday.

Russian oil output reached a record high of 556 million tonnes, or 11.16 million barrels per day (bpd), last year.

In the United States, crude oil production reached a record 12.2 million bpd in late March.

U.S. crude exports have also risen, breaking through three million bpd for the first time earlier this year.

With the new Permian pipelines (from July), we can see a boost of 500,000 to 600,000 bpd in U.S. exports, FGE said.

(CGTN)