Donald Trump’s move to pull the US out of the Iran nuclear deal means higher oil prices and more investment in long-neglected oil juniors, analysts say.

Iran is the world’s fifth biggest oil producer — and its output is expected to fall dramatically as US sanctions hit.

Oil prices rallied to multi-year highs on Wednesday, a day after President Donald Trump announced plans to withdraw the US from the Iran nuclear deal.

On Thursday morning West Texas Intermediate rose 2.8 per cent to $US71.17 a barrel — the highest level since November 2014.Brent crude in Europe, the international benchmark, also hit a three-year high, up 2.8 per cent to $US77.20 a barrel.

If oil can stay up around this point, that’s good news for ASX oil juniors because most companies are profitable at those prices, says Jason Teh from Vertium Asset Management.

>> Scroll down for a table showing how ASX-listed oil juniors have performed so far this year

Mr Teh did some crystal ball gazing for Stockhead — oil prices are notoriously difficult to predict — and said if future US sanctions on Iran were more onerous than everyone thinks they may be, oil prices could go up further.

The price of oil has broken through $US70.
The price of WTI crude oil has broken through $US70.

If Mr Trump’s bark is worse than his bite and sanctions turn out to be fairly weak, oil prices may fall.

One million barrels

It all depends on how much markets have priced in the risk that the extra 1 million barrels of oil Iran has produced since sanctions were lifted in 2016 will be removed from global markets.

Australian resources veteran Stephen Mitchell says the impact on global markets could be even stronger: Iranian oil production could go from 4 million barrels a day to less than 400,000.

Stephen Mitchell, chairman of the Lowell Resources Fund.

“Such a reduction would put some upward pressure on oil prices to the benefit of Australian producers, though I think some of this is already factored into the current oil price,” he told Stockhead.

“The issue is more likely to impact oil prices on the upside which may make investors more likely to invest in the sector than withdraw.”

In Australia, it’s the long oil price rise since July last year that is kicking off a resurgence in the sector, not the vagaries of international politics.

Triangle Energy (ASX:TEG) managing director Rob Towner says people are becoming interested in oil production and exploration again and life is about to become easier for long-maligned explorers.

In late March he was still reasonably pessimistic about the prospects of Australian explorers, but extremely positive about companies like Buru Energy (ASX:BRU) and Triangle which have producing operations.

His turn around has come because “people are now calling me”, thanks to positive momentum generated by oil price rises and the Northern Territory’s removal of the moratorium on fracking, a method of extracting gas from small cracks in rocks rather than big reservoirs.

Make it rain

Money is starting to flow back into ASX oil juniors. Among the larger recent capital raises, totalling $145.3 million, were:

Empire Energy (ASX:EEG) raised $1.875 million earlier this year and its shares went from under 2c to almost 4c on the day the Northern Territory removed the fracking moratorium.

Australis Oil & Gas (ASX:ATS) raised $39 million in March.

Alaska-focused 88Energy (ASX:88E) raised $17 million last week.

Elk Petroleum (ASX:ELK) raised $13.5 million this week.

And Sundance Energy (ASX:SEA), a once beloved US-focused explorer and producer whose shares haven’t recovered since a collapse in 2014, raised $73.9 million from the market in March and April.

“Even I was blown away,” Mr Towner said. “If there’s development opportunities, there’s money there.”

Here is a table showing how ASX-listed oil juniors have performed so far this year (Jan – May). Swipe or scroll for more data:

ASX CodeCompanyPrice change 2018 (Jan-May)Price May 9 (intraday)Market CapRegional focus
MPOMOLOPO ENERGY00.14--US
AOKAUSTEX OIL00.017--US
EEGEMPIRE ENERGY2.363636363640.03745.5MAust US
BASBASS OIL10.00410.4MAsia
CVNCARNARVON PETROL0.7346938775510.17175.0MAust
ATSAUSTRALIS OIL &0.6956521739130.39357.5MUS
88E88 ENERGY0.60.04203.9MUS
BYEBYRON ENERGY0.5576923076920.405280.8MUS
HZNHORIZON OIL0.5263157894740.145188.8MAsia
LKOLAKES OIL0.50.00355.2MAust
TAPTAP OIL0.2807017543860.07331.9MAust
KEYKEY PETROLEUM0.250.0114.8MAust
EXRELIXIR PETROLEUM0.1756756756760.08719.3MUS
OELOTTO ENERGY0.1754385964910.067105.6MAsia
BRUBURU ENERGY0.1692307692310.38168.5MAust
TDO3D OIL0.1666666666670.0716.6MAust
BRKBROOKSIDE ENERGY0.1666666666670.01413.8MUS
FPLFREMONT PETROLEU0.1428571428570.0085.4MUS
COECOOPER ENERGY0.09090909090910.36584.4MAust
ELKELK PETROLEUM0.05714285714290.074103.5MUS
GBPGLOBAL PETROLEUM0.0303030303030.0346.5MAfrica
OEXOILEX00.0047.5MAust Asia
TMKTAMASKA OIL & GA00.0035.9MUS
EMPEMPEROR ENERGY00.0032.7MAust
FDMFREEDOM OIL AND00.3282.2MUS
JKAJACKA RESOURCES00.002921.7kAfrica
PSAPETSEC ENERGY00.10534.0MUS
SSNSAMSON OIL & GAS00.0024.9MUS
NEWNEW ENERGY SOLAR (listed Dec 2017)-0.04421768707481.405468.5MAust
CUECUE ENERGY RES-0.05555555555560.06847.5MAust Asia
AJQARMOUR ENERGY-0.060.09436.9MAust
BULBLUE ENERGY-0.09677419354840.14144.4MAust
SEASUNDANCE ENERGY-0.1052631578950.068432.7MUS
ICNICON ENERGY-0.1071428571430.02514.9MAust
EORENHANCED OIL & G-0.1111111111110.0087.9MAsia
AVDANTILLES OIL AND-0.1304347826090.023.3MUS
BUYBOUNTY OIL & GAS-0.1428571428570.0065.7MAust
MELMETGASCO-0.1739130434780.05722.7MAust
IPBIPB PETROLEUMI-0.1818181818180.0091.4MAust
AOWAMERICAN PATRIOT-0.20.0286.9MUS
KPLKINA PETROLEUM-0.2526315789470.07127.2MAsia
REYREY RESOURCES-0.2542372881360.2246.7MAust
WBEWHITEBARK ENERGY-0.2727272727270.0086.9MAust
TPDTALON PETROLEUM-0.2857142857140.0055.1MUS
ABLABILENE OIL AND-0.30.0072.8MUS
JPRJUPITER ENERGY-0.320.06810.3MAsia
MAYMELBANA ENERGY-0.3333333333330.0118.3MUS
TEGTRIANGLE ENERGY-0.3440.08217.2MAust
HE8HELIOS ENERGY-0.3943661971830.04360.8MUS
WOFWOLF PETROLEUM-0.60.0085.5MMongolia
WELWINCHESTER ENERG-0.650.03510.3MUS