Oil prices firm up, buoyed by news U.S. will scrap rule on energy firms
Crude futures rose slightly on Monday, cheered 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 approved, the change would mean fewer restrictions on American energy companies investing in foreign countries.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in March CLH7, -0.26% traded at $53.97 a barrel, up $0.14 in the Globex electronic session. April Brent crude LCOJ7, -0.48% on London’s ICE Futures exchange slipped 4 cents to $56.76 a barrel.
Over the weekend, crude oil pivoted higher as energy investors digested the news that the Trump administration is prepared to roll back the Dodd-Frank Act, including nullifying the requirement for extractive-industry corporations, such as oil and gas companies, to disclose their payments to foreign governments, said the Singapore-based Oversea-Chinese Banking Corp. in a note.
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.”
“Moreover, American businesses could face a competitive disadvantage in cases where their foreign competitors are not subject to similar rules,” the White House said.
Analysts say tension between the U.S. and Iran is also keeping prices on the rise.
“While the move by the U.S. to impose new restrictions on Iran for testing a ballistic missile, it does raise the risk of further tensions disrupting supply,” said a report by ANZ Research.
Iran, which produces around 3.7 million barrels a day, 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 spearheaded by the Organization of the Petroleum Exporting Countries, Tehran is said to be aggressively seeking fresh investment to help jumpstart its antiquated petroleum industry. A reinstatement of sanctions would derail its plan.