U.S. oil rose above $70 a barrel for the first time since November 2014 as traders braced for a re-imposition of U.S. sanctions on Middle East crude producer Iran.

Futures in New York and London jumped as much as 1.4 percent. While President Donald Trump has threatened he’ll pull out of a deal between Iran and world powers as a May 12 deadline nears, he’s signalled he’ll be open to negotiation. The 2015 accord eased sanctions on OPEC’s third-largest member in exchange for curbs on its nuclear program, and renewed American measures may stifle the Middle East nation’s crude exports.

Iran has come out against higher prices, after a rally of over 12 percent this year on output cuts by the Organization of Petroleum Exporting Countries and its allies as well as rising geopolitical risks in the Middle East. Crude at $60 to $65 a barrel is “suitable,” an official from the OPEC producer said on Sunday, signalling a split with fellow group member Saudi Arabia that’s said to be aiming for $80 oil. The cartel will meet next month in Vienna.

“Fresh sanctions, which would remove some of Iran’s crude supplies from the global market, will tighten the balance between demand and supply and support crude prices,” Takayuki Nogami, chief economist at state-backed Japan Oil, Gas & Metals National Corp., said by phone from Tokyo. “While there could be profit-taking given current oil prices, it will be limited as concerns over Iran are rising.”

West Texas Intermediate oil for June delivery climbed as much as 97 cents to $70.69 a barrel on the New York Mercantile Exchange, and traded at $70.41 at 2:53 p.m. in Singapore. Total volume traded was about 61 percent above the 100-day average. Prices rose 2.4 percent last week.

Brent for July settlement rose 68 cents to $75.55 a barrel on the London-based ICE Futures Europe exchange. Prices climbed 0.3 percent last week. The global benchmark crude, which is also on course for the highest close since November 2014, was at a $5.29 premium to July WTI.

Yuan-denominated futures for September delivery rose 2.9 percent to 460 yuan per barrel on the Shanghai International Energy Exchange. The contract climbed 0.6 percent last week.

While refusing to reveal what he’ll do by May 12, Trump repeated his belief the existing accord is “a horrible agreement for the United States.” But, he added, “That doesn’t mean I wouldn’t negotiate a new agreement.” Meanwhile, America’s European allies continue to back the deal, saying it has been essential to reining in Iran’s nuclear program.

Iran Prepares

Iran has been preparing for months for the possibility that Trump will pull out of the nuclear agreement, President Hassan Rouhani said, warning that the U.S. would quickly come to regret such a decision. The constant fluctuation in oil prices is destabilizing for future investment and security of supply, Iranian Oil Minister Bijan Namdar Zanganeh said.

Energy market consultant FGE has said that sanctions on Iran could cut its output by up to 500,000 barrels a day by the end of this year. Since sanctions were eased as of January 2016, Iran’s crude production has almost doubled, while exports soared to record levels last month. (Bloomberg)

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