Oil rose after Iran’s nuclear accord with world powers left the timing of increased crude supplies from the OPEC member uncertain and as Saudi Arabia raised prices for shipments to Asia.
Futures climbed as much as 2.5% in New York.
Physical oil markets won’t be affected by Iran before 2016 as the potential lifting of sanctions, which could allow the Persian Gulf nation to boost production, still faces obstacles, according to Morgan Stanley.
Saudi Arabia, the world’s biggest crude exporter, narrowed the discount on its main Arab Light grade for next month’s sales to Asia.
Oil has advanced the past three weeks amid speculation that Iran won’t be able to boost its crude exports immediately and add to a global supply glut that drove oil almost 50% lower in 2014.
Global demand is improving, Saudi Arabia’s Oil Minister Ali al-Naimi said on March 23.
“There isn’t going be an immediate removal of sanctions against Iran as it initially requested, so there won’t be a huge change in supplies in the near future,” Hong Sung Ki, a commodities analyst at Samsung Futures Inc. in Seoul, said.
“The Saudis are raising OSPs because there seems to be some support from the demand side.”
West Texas Intermediate for May delivery gained as much as $1.21 to $50.35 a barrel in electronic trading on the New York Mercantile Exchange and was at $50.04 at 1:30 p.m. Singapore time.
The contract fell 95 cents to $49.14 on Thursday. Total volume was about 9 percent below the 100-day average. The exchange was closed April 3 for the Good Friday holiday.
Brent for May settlement climbed as much as $1.11, or 2%, to $56.06 a barrel on the London-based ICE Futures Europe exchange. It dropped $2.15 to $54.95 on Thursday. The European benchmark crude traded at a premium of $5.60 to WTI.
A preliminary accord Thursday with world powers signals Iran may be able to accelerate crude exports within months of a final agreement that negotiators plan to conclude in June.
The US and European Union would lift economic sanctions on the Persian Gulf nation if the International Atomic Energy Agency verifies its compliance with curbs on its nuclear program.
If Iran expands output by 1 million barrels a day and clears supplies held in floating storage, any “cyclical recovery” in global oil prices could be delayed by as long as one year, according to Morgan Stanley.
The verification by the IAEA could take more than six months, Adam Longson and other analysts said in a report on Sunday.
Iran’s oil exports have been reduced by half to about 1 million barrels a day after sanctions were imposed in mid-2012. It tied Kuwait last month as the third-largest producer in the Organization of Petroleum Exporting Countries, a Bloomberg survey showed.
Saudi Arabian Oil Co. will ship Arab Light in May at 60 cents a barrel below a regional benchmark, the state-owned company said in an e-mailed statement on Sunday.
That’s up from a discount of 90 cents for April. Tehran-based National Iranian Oil Co. will probably also increase its May prices, according to a quarterly formula it’s used previously.
Earlier this year, both companies offered steeper discounts to their customers in Asia to compete with supplies from Latin America, Africa and Russia.
Hedge funds and other money managers boosted their net-long position on WTI by 21% in the seven days ended March 31, data from the US Commodity Futures Trading Commission showed.
That’s the biggest percentage gain since March 2011.