Oil prices rise as US threatens new sanctions on Iran

Tom Belger
Finance and policy reporter
US Navy patrol boats carrying journalists to see damaged oil tankers. Photo: AP Photo/Kamran Jebreili

Oil prices continued to rise on Monday morning as the United States prepares to announce new sanctions on Iran.

Crude and brent prices have spiked in recent weeks after a US drone was shot down by Iran. The Iranian regime has also been accused of blowing up oil tankers.

Brent futures (BZ=F) were up around 0.8% at $65.69 a barrel at 9.30am on Monday, while crude (CL=F) was up 0.7% to $57.84 a barrel.

US secretary of state Mike Pompeo said “significant” new sanctions would be announced on Tehran on Monday.

Trump said he called off a military strike against Iran on Friday after a US drone was shot down, saying he was “not looking for war.”

READ MORE: Trump warns ‘Iran made a very big mistake’

Iran said the drone was over its territory, but the US said it was in international airspace.

"There's a very firm tone to trading on well above average volumes," according to Michael McCarthy, chief market strategist at CMC Markets in Sydney.

"We've got concerns about the sanctions against Iran, [but] we are seeing a better demand picture because of the actions of central banks, which is benefiting all commodities ... and we have got a weaker US dollar," McCarthy said.

The rising tensions over recent events, as well as concerns over Iran’s nuclear programmes, saw Brent prices rise 5% last week, its first weekly gain in five weeks.

A US Navy personnel prepares at a patrol boat to carry journalists to see damaged oil tankers. Photo: AP Photo/Kamran Jebreili