Iran fears send US oil above $70 for first time since 2014

Why are oil prices rising?
Why are oil prices rising?

Rising oil prices just passed another milestone.

US benchmark crude closed above $70 per barrel on Monday for the first time since November 2014.

Oil prices have been climbing partly because of expectations that President Donald Trump will abandon the 2015 Iran nuclear deal, which allowed Iran to export more crude.

"The focus of oil markets is currently on the US president's pending decision on the fate of the Iran nuclear deal," said Victor Shum, an oil industry analyst at research firm IHS Markit.

US crude settled at $70.73 per barrel. It dropped back below $70 later in electronic trading, after Trump said he would announced his decision on the Iran deal on Tuesday afternoon.

The recent surge in prices suggests markets are assuming there will be some disruption to Iran's exports, Shum said. Trump has to decide by May 12 whether to bring back sanctions against the country.

Related: Oil markets brace for Trump to kill Iran deal

US oil prices have gained more than 16% since the start of the year. Brent, the global benchmark, is up around 13%.

Prices have also gotten a lift from strong global demand and supply cuts by OPEC and Russia. But it's the Iran question that's driving short-term trading, experts say.

"We'll see what happens," Trump said last week about his decision on the Iran deal. "I'm not telling you what I'm doing, but a lot of people think they know."

Restoring sanctions on Iran could affect as many as 1 million barrels per day of crude supply.

But Shum said the impact is unlikely to be as severe as the multinational sanctions imposed on Iran in 2012.

That's because the European Union, whose members have been urging Trump not to pull out of the deal, may not go along with new sanctions. And China, a huge oil importer, could also push back.

Related: Who loses if Trump kills the Iran deal?

Some American allies — including India, Japan and South Korea — are expected to cut Iran off, according to experts.

Although imposing sanctions on Iran would disrupt oil markets, the immediate impact on prices may end up being quite limited when the decision is actually announced because investors are already pricing it in.

"I don't think you should expect an acute spike given the fact that it's already been pretty well telegraphed," Brian Kessens, a portfolio manager at energy investment firm Tortoise Capital, said last week.

CNNMoney's Matt Egan contributed to this report.

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