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Oil prices steadied on Friday as U.S. sanctions on Tehran squeezed Iranian crude exports. tightening supply even as other key exporters increased production.
Global crude oil benchmark Brent LCOc1 was up 20 cents at $81.92 a barrel by 0820 GMT. The contract hit a four-year high of $82.55 this week but has been fairly stable during the third quarter. gaining around 3 percent since the end of June.
U.S. light crude CLc1 was 20 cents higher at $72.32 a barrel. It is up around 3.5 percent this month. but down 2.6 percent since the end of June.
“Dips remain well supported as Iran sanctions continue to underpin sentiment.“ said OANDA head of APAC trading Stephen Innes. but added: “While the likely loss of Iranian supply may be the dominant market theme. OPEC production may be rising.“
U.S. sanctions on Iran. the third-largest producer in the Organization of the Petroleum Exporting Countries. kick in on Nov. 4. as Washington asks buyers of Iranian oil to cut imports to zero to force Tehran to negotiate a new nuclear agreement and to curb its influence in the Middle East.
Other OPEC countries have been increasing production in recent months but global inventories have been falling as supply tightens. analysts say.
Saudi Arabia is expected to add extra oil to the market over the next couple of months to offset the drop in Iranian production.
Two sources familiar with OPEC policy told Reuters Saudi Arabia and other producers had discussed a possible production increase of about 500.000 barrels per day (bpd) among OPEC and non-OPEC producers.
However. ANZ said in a note on Friday that major suppliers were unlikely to offset losses due to the sanctions estimated at 1.5 million bpd.
At its 2018 peak in May. Iran exported 2.71 million bpd. nearly 3 percent of daily global crude consumption.
Looking to 2019. Saudi Arabia is concerned rising U.S. shale production could create another glut. especially if a stronger dollar and weaker emerging market economies reduce global demand for oil.
OPEC forecasts that its non-OPEC rivals led by the United States will increase output by 2.4 million bpd in 2019 while global oil demand should grow by just 1.5 million bpd.
U.S. crude production hit a record high of 11.1 million bpd last week. the U.S. Energy Information Administration estimates.
