Oil Prices Rise Amid New Iran Sanctions and Iraq's OPEC+ Commitment

By Shariq Khan

(Reuters) -Oil prices settled higher on Monday as fresh U.S. sanctions on Iran and a commitment to compensate for overproduction by Iraq added to concerns of near-term supply tightness, helping the market recover some of Friday's steep losses.

Brent crude futures settled up 35 cents, or 0.5%, at $74.78 a barrel. U.S. West Texas Intermediate crude futures gained 30 cents, or 0.4%, to $70.70.

On Friday Brent notched its lowest close since February 6 while WTI had its lowest settlement so far this year.

On Monday, the U.S. Treasury imposed a fresh round of sanctions targeting Iran's oil industry, hitting brokers, tanker operators, and shippers who sell and transport Iranian petroleum.

That might have had a modest impact on oil prices, along with the Iraqi oil ministry's reaffirmation of its commitment to the OPEC+ group's supply agreement, UBS analyst Giovanni Staunovo said.

He cautioned, however, that Iranian crude oil exports remain elevated. "Time will tell if (the sanctions) impact exports," he said.

Iraq said it would present an updated plan to compensate for any overproduction of its OPEC+ quotas in recent months. Iraq on Sunday said it will export 185,000 barrels per day from Kurdistan's oilfields through the Iraq-Turkey pipeline once oil shipments resume.

Oil prices were bound to recover from the prior session's steep selloff, when expectations of the resumption in northern Iraqi exports and of an end to the war in Ukraine pulled benchmarks more than $2 lower, Commodity Context analyst Rory Johnston said.

The market structure has also flashed signs of near-term supply tightness, he added. The premium of front-month Brent futures over the next month's contract was at its highest on Monday since February 11, having climbed steadily over the past week.

Others cautioned oil prices could stay under pressure from talks to end the Ukraine war, which could pave the way for more Russian oil onto the market, and a slew of U.S. tariff measures, which could weigh on economic activity and crude oil demand.

U.S. President Donald Trump said on Monday the U.S. is close to a minerals deal with Ukraine as he and French President Emmanuel Macron held talks that covered prospects for ending the Ukraine war despite stark differences on how to proceed.

Trump said Washington is 'on time' with tariffs against Canada and Mexico, responding to a question about the deadline ending a previous pause on such action which expires next week.

"We're just clearing out room to trade lower and I would be cautious if I was a buyer in the market today," Mizuho analyst Robert Yawger said.

"Just sitting here, waiting for the next big event to happen, and obviously there are plenty of big ones out there that could hit any moment."

(Reporting by Anna HirtensteinAdditional reporting by Mohi Narayan and Emily Chow; Editing by David Goodman, Sharon Singleton, Bill Berkrot and David Gregorio)