Oil prices edged up on Monday as new U.S. sanctions on Iran and a commitment to compensate for excess production by Iraq added to concerns about a short-term supply squeeze, helping the market recover some of Friday's steep losses.

Brent crude futures rose 45 cents, or 0.6%, to $74.88 a barrel by 1:39 p.m. EST (1839 GMT), after closing at their lowest since Feb. 6 on Friday. U.S. West Texas Intermediate crude futures rose 43 cents, or 0.6%, to $70.83, recovering from their lowest settlement so far this year in the previous session.

The U.S. Treasury Department imposed a new round of sanctions targeting Iran's oil industry on Monday, hitting brokers, tanker operators and shippers for their role in selling and transporting Iranian petroleum. That may have little impact on oil prices, along with Iraq's oil ministry reaffirming its commitment to the OPEC+ supply deal, said UBS analyst Giovanni Staunovo.

However, he cautioned that Iranian crude exports remain high. "Time will tell if [the sanctions] have an impact on exports," he said.

Meanwhile, Iraq said it would present a new plan to compensate for the overproduction of OPEC+ production quotas in recent months. Iraq said on Sunday it would export 185,000 barrels per day from its Kurdistan oilfields via an Iraq-Turkey pipeline once oil shipments resume.

Oil prices are likely to recover from the sharp sell-off in the previous session, when expectations of a resumption of exports to northern Iraq and an end to the war in Ukraine sent the benchmark down more than $2, said Commodity Context analyst Rory Johnston.

The market structure has also shown signs of short-term supply tightness in recent sessions, he added. The premium for front-month Brent crude futures to the next-month contract hit its highest since Feb. 11 on Monday, after rising steadily over the past week.(Newsmaker23)

Source:Routers