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Oil prices increase on Monday over supply concerns in Middle East

Oil prices witnessed an increase on Monday over concerns that conflict in Iraq and Yemen could upset supplies.

Front-month brent futures increased 65 cents to $67.46 a barrel, while US crude rose 79 cents to $60.48, Reuters reported.

Conflicts including Islamic State militants seizing control of Ramadi, and a Saudi-led coalition in Yemen resuming air strikes against Houthi militia in Aden gave strength to the prices.

 

"Oil prices appear to have outpaced the improvement in underlying fundamentals."

 

However gains were capped by production boost from US.

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Reuters cited a report from Goldman Sachs saying: "We see global oil demand being met by US shale, which is continuing to benefit from efficiency and productivity improvements, and OPEC."

Barclays told the news agency: "Oil prices appear to have outpaced the improvement in underlying fundamentals."

Iran Deputy Oil Minister Rokneddin Javadi said the Organization of the Petroleum Exporting Countries (OPEC) will hold a meeting next month with no plans to cut output.

 

Sanctions on Iran could be lifted if a deal over the country's disputed nuclear programme between Tehran and world powers finalises in June.

Since 2012, oil exports in Iran have fallen to around one million barrels per day (bpd).

 

In 2016, oil production in the US is expected to rise by 205,000bpd, despite an expected dip in output in the second half of 2015, Goldman Sachs said.

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