Picture: REUTERS
Picture: REUTERS

Singapore — Oil prices held firm on Tuesday as ongoing production cuts by the Opec cartel and looming US sanctions against Iran tightened the market.

There were also signs of continued strong demand.

Brent crude futures, the international benchmark for oil prices, were at $78.30 a barrel at 4.32am GMT, up 7c from their last close and not far off a three-and-a-half-year high of $78.53 a barrel reached the previous session.

US West Texas Intermediate (WTI) crude futures were at $71.02 a barrel, up 6c and also not far off their November 2014 high of $71.89 a barrel, reached last week.

Markets have generally tightened as the Organisation of the Petroleum Exporting Countries (Opec), led by Saudi Arabia, has been withholding supplies since 2017 in order to push up oil prices.

With renewed US sanctions looming against Opec member Iran, analysts said crude prices were well supported.

"The commitment of Saudi Arabia and the rest of Opec to the production cuts is a major factor in supporting the price at the moment, as well as the possibility of reduced exports from Iran due to sanctions," said William O’Loughlin, investment analyst at Rivkin Securities.

The Opec cuts and looming sanctions come amid strong demand.

In China, the world’s biggest oil importer, refinery runs rose nearly 12% in April compared with the same month a year ago, to about 12.06-million barrels a day, marking the second-highest level on record on a daily basis, data showed on Tuesday.

The tightening market has all but eliminated a global supply overhang which depressed crude prices between late 2014 and early 2017.

Opec figures published on Monday showed that oil inventories in Organisation of Economic Co-operation and Development (OECD) industrialised nations in March fell to 9-million barrels above the five-year average, down from 340-million barrels above the average in January 2017.