Seoul: Oil prices poised for a second monthly advance, propelled by the prospect of a disruption in Iranian supplies and as the Organization of Petroleum Exporting Countries (Opec) closes in on its target of wiping out a global glut.

Futures in New York are up 3.9% this month, even after a near 1% drop on Monday following data that showed an increase in US drilling activity. A potential withdrawal in May by US President Donald Trump from a 2015 nuclear deal between world powers and Iran would reimpose sanctions on the producer and curb its exports. Meanwhile, Opec’s trimming output even after concluding it’s cleared 97% of the surplus that’s weighed on prices.

Oil prices have surged to levels last seen in 2014 as everything from the conflict in Syria to tensions between Saudi Arabia and Iran-backed rebels in Yemen stoked concerns over supply disruptions. French President Emmanuel Macron’s prediction that the US will pull out of the nuclear deal has boosted speculation over reduced shipments from the Islamic Republic. Still, expanding American drilling activity continues to weigh on prices.

“We’ll see oil fluctuating as uncertainties will persist over whether Trump will withdraw from the Iran nuclear agreement," Vincent Hwang, a commodities analyst at NH Investment & Securities Co., said by phone in Seoul. “Prices have rallied as OPEC and its allies including Russia have eroded global inventories and as geopolitical risks surrounding the US and the Middle East have increased this month."

West Texas Intermediate (WTI) crude for June delivery traded at $67.48 a barrel on the New York Mercantile Exchange, down 62 cents, at 8.23am in London. The contract fell 0.4% last week. Total volume traded was about 17% below the 100-day average.

Brent crude for June settlement, which expires Monday, dropped 74 cents to $73.90 a barrel on the London-based ICE Futures Europe exchange. Prices are up 5.2% for the month. The global benchmark crude traded at a $6.43 premium to June WTI. The more-active July contract traded at $73.16.

Trading on the Shanghai International Energy Exchange is closed for a Chinese public holiday. Futures for September delivery had risen 0.6% to 444.2 yuan per barrel on Friday, gaining 5.7% this month.

While US defense secretary Jim Mattis said last week that there’s been no decision on the nuclear deal, the nervousness around a potential breakdown in the accord is also spilling over into the physical oil market.

Traders are unwilling to sign contracts for Iranian crude and refined products that would be valid after May 12, the deadline for Trump to decide whether to reimpose sanctions, according to recent interviews with six companies that buy and sell oil in the Middle East.

In the US, working oil rigs rose by five last week to 825, the highest level since March 2015, according to data from Baker Hughes. The rig fleet has expanded throughout the entire month of April, adding a total 28. Investors are assessing if surging US production, which has topped 10 million barrels a day every week since early February, will undermine efforts by Opec to balance the market via output cuts. Bloomberg

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