By Biman Mukherji 

Oil futures rose sharply in Asian trading Monday, hitting new 3 1/2-year highs as the U.S. benchmark hovered around $70 a barrel and a deadline to renew waivers of U.S. sanctions on Iran loomed.

Concerns over the possibility President Donald Trump won't renew the waivers, which expire Saturday, have pushed crude prices higher--including by nearly 2% on Friday--even as the U.S. dollar has rebounded. A stronger dollar often pressures prices of oil and other dollar-denominated commodities.

On the New York Mercantile Exchange light, sweet crude for June delivery recently was up 1% at $70.40 a barrel in the Globex trading session. July Brent crude on London's ICE Futures exchange rose 1.1% to $75.66.

West Texas Intermediate, the U.S. benchmark, entered Monday's trading having gained in 15 of the past 20 trading days. Over the same period, the WSJ Dollar Index rose some 2.5%.

Brent futures, the global benchmark, have climbed in nine of the past 12 weeks.

The sanctions on Iran were lifted under a 2015 agreement among a group of world powers aimed at curbing Tehran's nuclear activities.

"We think that it is highly likely that President Trump will exercise the exit option despite the recent best efforts of European leaders to fix the nuclear deal," said Helima Croft, head of commodity strategy at RBC Capital Markets.

She said the impact on the oil market from such an action would depend on the terms of the withdrawal from the deal. A more gradual reinstatement of U.S. sanctions would likely allow foreign refiners to slowly reduce their Iranian imports, said Ms. Croft.

With outages in major oil producer Venezuela and member nations of the Organization of the Petroleum Exporting Countries firmly adhering to continuing output caps, a potential reduction in Iranian production if U.S. sanctions are reimposed would be yet another factor offsetting record American crude output, analysts said.

Escalated tensions with Iran could restrict the ability of oil to pass through the Strait of Hormuz out of the Persian Gulf, said Stuart Ive, private client manager at OM Financial. He said the hard positions taken by the U.S. and Iran meant "the Iranian nuclear agreement is already all but dead."

Write to Biman Mukherji at biman.mukherji@wsj.com

(END) Dow Jones Newswires

May 07, 2018 02:50 ET (06:50 GMT)