Oil Set for Weekly Gain Amid Bets Trump Will Exit Iran Accord

Oil headed for a weekly gain amid growing expectations that U.S. President Donald Trump will withdraw from a nuclear accord with Iran, threatening crude exports from OPEC’s third-largest producer.

Futures in New York have advanced 0.7 percent this week. Iranian Foreign Minister Mohammad Javad Zarif accused the U.S. of “bullying” businesses into putting off investments in the Middle East nation, days before Trump decides whether to pull out from the accord. Russia’s Foreign Ministry supported Iran’s position that the deal shouldn’t be modified. A withdrawal would reintroduce sanctions on the Islamic Republic.

“This will be the main issue preoccupying the oil market, with fundamental factors such as stock levels and production data taking a back seat until this has been resolved,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt.

Oil-price increases in recent weeks have been driven by speculation over the fate of the nuclear deal, as well as rising geopolitical tensions in other parts of the Middle East. Crude has also been bolstered by the Organization of Petroleum Exporting Countries and its allies including Russia persisting with output curbs to clear a global glut. All that has meant prices are up more than 10 percent this year even though U.S. production is booming.

West Texas Intermediate crude for June delivery rose 19 cents to $68.62 a barrel on the New York Mercantile Exchange at 12:59 p.m. in London, after gaining 0.7 percent on Thursday. Total volume traded was about 5 percent above the 100-day average.

Brent crude for July settlement was 15 cents higher at $73.77 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude was at a $5.32 premium to July WTI.

Iran’s Criticism

Yuan-denominated futures for September delivery were little changed at 446.9 yuan per barrel on the Shanghai International Energy Exchange, a 0.6 percent increase this week.

Iran intensified its criticism of Trump ahead of a May 12 deadline he’s set for making a decision on the accord, stating that there’s “only one way forward and it’s U.S. compliance, not appeasement.” Citing the Islamic Republic’s missile program and its role in Middle East conflicts, the U.S. president has ridiculed the nuclear agreement reached under his predecessor as “flawed” and a “disaster.”

Russia believes that the mechanisms of the agreement are functioning adequately and don’t need any alterations, Foreign Ministry spokeswoman Maria Zakharova told reporters at a weekly briefing in Moscow.

Other oil-market news:

The Chicago Mercantile Exchange hiked margins — or the amount traders need to keep on deposit — twice in a week on contracts that track the difference between WTI crude in Midland, Texas, versus the benchmark delivered into Cushing, Oklahoma. The Cboe/Nymex Oil Volatility Index was set to increase 0.9 percent this week, its first weekly gain in three. Russia reaffirmed its pledge to an alliance with OPEC, despite two months of breaching its target under a global oil-output deal. The flow of Brent crude oil to an export terminal in Scotland was halted this week, a development that will further erode already weak shipments from the North Sea.