Oil futures climbed more than $1 a barrel yesterday, after Saudi Arabia raised its prices for crude sales to Asia for the second month running, signalling improved demand in the region.
International benchmark Brent regained ground after tumbling as much as 5 per cent on Thursday when Iran reached a preliminary deal on its nuclear programme with six world powers. More Iranian oil could enter global markets if that is followed by a comprehensive deal by June.
But expectations of an immediate increase in supply have been tempered as analysts warned a ramp-up in exports could take months and would likely not happen before 2016.
“While clearly a bearish headline, a final deal and full lifting of sanctions still faces a number of obstacles,” Morgan Stanley analysts said.
“Even if a final deal is reached, we do not expect any physical market impact before 2016.”
Brent crude for May delivery LCOc1 touched a high of $56.90 a barrel. US crude for May delivery CLc1 was $1 higher at $50.14 a barrel, after earlier touching $50.97.
The world’s top exporter Saudi Arabia kept output steady and cut its official selling prices (OSPs) sharply late last year in a fight for market share during a global supply glut.
Its ability to raise prices for April and May suggests its strategy is working, although competition has kept its flagship Arab Light at a discount to Oman/Dubai quotes, analysts said.