The oil complex strengthened Monday as US Secretary of State Mike Pompeo promised America would place the "strongest sanctions in history" on Iran unless Tehran took steps to change its behavior.
NYMEX June crude rose 96 cents Monday to $72.24/b. ICE July Brent settled 71 cents higher at $79.22/b. ICE August Brent rose 77 cents to $79.26/b, leaving the July/August spread in a 4-cent/b contango.
"The [Iranian] regime has been fighting all over the Middle East for years," Pompeo said. "After our sanctions come in force, it will be battling to keep its economy alive."
In a speech Monday, Pompeo outlined a list of a dozen requirements that Iran must satisfy for the US to lift new and reimposed sanctions on the trading of Iranian oil.
Pompeo also indicated Monday that the US did not plan on offering relief to European allies looking to conduct business with Iran that would run afoul of said sanctions.
"Well, any time sanctions are put in place, countries have to give up economic activity," he told an audience at the Heritage Foundation.
"Our effort is to strangle his economic capacity to do harm to the Middle East and to the world," Pompeo said, referring to Qassem Soleimani, the head of Iran's Quds force.
The EU on Friday announced a series of measures aimed at shielding the bloc's companies in Iran from the re-imposed US sanctions and protecting oil trade with OPEC's third largest producer.
On his Twitter account, Iran's foreign minister Mohammed Javad Zarif called US diplomacy a "sham" dictated by special interests making the "same wrong choices and will thus reap the same ill rewards."
Another supportive factor for oil prices Monday was the US vowing to slap new sanctions on Venezuela in retaliation for Sunday's presidential election, which Pompeo called "fraudulent."
US Deputy Secretary of State John Sullivan told reporters Sunday that oil sanctions were "under active review."
Venezuelan president Nicolas Maduro was elected Sunday to a second six-year term under conditions widely criticized as unfair.
Despite strength in outright prices, the term structure at the front end of the ICE Brent curve continues to weaken.
The July/August spread settled Monday in a 4-cent/b contango. The front-month/second-month spread had been backwardated since September
NYMEX June ULSD rose 83 points Monday to settle at $2.2738/gal. NYMEX June RBOB settled 2.32 cents higher at $2.2565/gal.
