Crude futures was lifted slightly on Monday as the U.S. government was poised to scrap a rule that calls for transparency on payments by energy and metals firms to foreign governments.
If this would be approved, the change would mean less restrictions an American energy companies investing in foreign countries.
On the New York Mercantile Exchange, crude futures for delivery in March traded at $54.04 a barrel, up $0.06 in the Global electronic session. April Brent crude on London’s ICE Futures exchange rose 20 cents or 0.4% to $57.01 a barrel.
The Security and Exchange Commission’s transparency rule went into effect in 2010. The intention was to reduce corruption in resource-rich countries by requiring energy and mining companies to account for the royalties and payments they make to those foreign governments.
The White House said the SEC rule “would impose unreasonable compliance costs on American energy companies that are not justified by quantifiable benefits.”
Analysts say tension between the U.S. and Iran is also keeping prices on the rise.
Producing around 3.7 million barrels a day, Iran was welcomed back to the global oil markets in January last year after the U.S. lifted the sanctions against its oil exports. Even though the country is a participant in a production-cutback deal initiated by the Organization of the Petroleum Exporting Countries (OPEC), Iran is said to be aggressively looking for fresh investment to help jumpstart its antiquated petroleum industry. A reinstatement of sanctions would derail its plan.
A downside, however, is the steady improvement in U.S. oil drilling. Data from oilfield-service firm baker Hughes showed American oil operators added 17 active oil rigs there last week, bringing the total to 583. Analysts warn that as U.S. oil companies are returning to oil patches, OPEC’s effort pushes prices higher by reducing global supply could be undermined.
The benchmark gasoline contract, Nymex, reformulated gasoline blendstock for March and rose 132 points to $1.5669 a gallon, while March diesel traded at $1.6706, higher by 55 points.