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Oil Futures Settle At Near 6-month High

Crude oil prices ended notably higher, extending gains from previous session, amid rising prospects of a shortage in crude supply in the global market.

The U.S. government's decision to stop granting sanctions waivers that allow limited imports of Iranian crude pushed oil prices up north on Monday and the trend continued today as well.

West Texas Intermediate Crude oil futures for June ended up $0.75, or 1.1%, at $66.30 a barrel, a near six-month high.

Brent crude futures for June rose to a high of $74.73, the best level in about six months, before dropping down to around $74.55 a barrel.

On Monday, crude oil futures for June ended up $1.70, or 2.66%, at $65.70 a barrel.

The U.S. on Monday came out with an announcement on Monday, saying it would not extend waivers to buy Iranian crude oil for India, China, Turkey, Japan and South Korea when those waivers expire early next month.

The buyers of Iranian oil have to stop purchases by May 1 or face sanctions, it said.

Following U.S.'s decision, Iran has threatened that it will shut the Strait of Hormuz, a key chokepoint for Persian Gulf crude producers, according to a report in Bloomberg.

Saudi Arabia's energy minister Khalid Al-Falih said in a statement that the country would coordinate with other crude producers to ensure that adequate supplies are available and the market "does not go out of balance."

"In the next few weeks, the Kingdom will be consulting closely with other producing countries and key oil consuming nations to ensure a well-balanced and stable oil market, for the benefits of producers and consumers as well as the stability of the world economy."

Meanwhile, traders are looking ahead to the weekly oil reports. The American Petroleum Institute is scheduled to release its weekly oil report later in the day, while the Energy Information Administration's crude inventory data is due Wednesday morning.

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