Oil prices rose more than 2 percent on Tuesday as USA sanctions squeezed Iranian crude exports, tightening global supply despite efforts by Washington to get other producers to increase output. In the U.S, crude inventories at the storage hub of Cushing, Oklahoma, may have increased for a fifth week, according to estimates compiled by Bloomberg.
West Texas Intermediate for October delivery traded at $67.87/bbl on the New York Mercantile Exchange, up $0.33 in London. Benchmark Brent crude oil LCOc1 was up 50 cents at $77.87 a barrel. Brent has climbed for four straight sessions, gaining 2.2 percent the previous day.
"A drawdown in crude oil inventories isn't very comforting when you're going to lose a lot of Iranian crude in a couple of weeks", said Phil Flynn, an analyst at Price Futures Group.
Chinese media Xinhua said the U.S. Energy Information Administration (EIA) forecast on Tuesday that U.S. crude oil production will average 10.7 million bpd in 2018, up from 9.4 million barrels bpd in 2017, and will average 11.5 million barrels bpd in 2019. US shale, while signs of a production slowdown have yet to really materialize in the production data from the EIA, is still running into a rough patch.
The United States is pushing all countries to halt oil imports from Iran after President Donald Trump in May withdrew from a 2015 deal between Iran and six world powers and ordered a re-imposition of sanctions on it. The U.S. Treasury department in conjunction with the United International locations on Wednesday imposed sanctions on a number one Libyan militia chief for his attacks on necessary oil facilities in June.
In addition, the European Union, which had previously joined the U.S.in targeting Iranian oil exports in 2012, has shown its unwillingness to follow Washington's lead this time around, openly vowing to rebel against the USA sanctions regimen and increasing the likelihood that Europe will continue to buy some Iranian oil despite US threats.
She said: "The hurricane story is transitory but the oil market us particularly sensitive to such events as we have a pretty tight supply situation looming".
Novak said global oil markets were "fragile" due to geopolitical risk and supply disruptions, but added his country could raise output if needed.
"It is related to the fact that not all the countries have managed to restore their market and production", he said, referring to outages and falling production in Mexico and Venezuela.
Should markets overheat and prices spike, however, Novak said Russian Federation could increase its output. Iranian oil exports should go from about 2.7 million bpd-2.8 million bpd from earlier this year to about 1 million bpd-1.2 million bpd by the end of this year, Sen told CNBC earlier this month.
Prices were also pushed up by Hurricane Florence, which is expected to make landfall on the U.S. East Coast on Friday, and which has caused fuel shortages following the evacuation of millions of households and businesses.