Flames emerge from a pipeline at the oil fields in Basra, southeast of Baghdad, Iraq, on October 14, 2016.Picture: REUTERS
Flames emerge from a pipeline at the oil fields in Basra, southeast of Baghdad, Iraq, on October 14, 2016.Picture: REUTERS

New York — Oil prices rose on Tuesday on growing supply disruptions in Norway and Libya, but gains were pared after the US said it would consider requests for waivers from Iranian oil sanctions.

Brent crude futures rose by 64c to $78.71 a barrel by 2.38pm GMT. Earlier, the global benchmark hit a session high of $79.51. US crude futures were up 13c at $73.98, after hitting a high of $74.70.

Earlier in the session, prices had been within striking distance of the four-year highs, said Bob Yawger, director of energy futures at Mizuho. They retreated, however, following a statement by US secretary of state Mike Pompeo that the US would consider requests from some countries to be exempted from sanctions on Iranian oil that it will put in effect in November.

"That basically took the wind out of the sails from the market," said Phil Flynn, analyst at Price Futures Group in Chicago. "But it isn’t unlike anything that they’ve said before. But it all depends on which countries they’re talking about. Is it big buyers of Iranian crude? Is it India? ... Is it temporary waivers?"

Last month, the US said it wanted to reduce oil exports of fifth-biggest producer Iran to zero by November. Still, supply concerns elsewhere were pushing Brent prices higher. Hundreds of workers on Norwegian offshore oil and gas rigs went on strike on Tuesday after rejecting a proposed wage deal, leading to the shutdown of one Shell-operated oil field.

Libyan oil production fell to 527,000 barrels per day (bpd) from a high of 1.28-million bpd in February following recent oil port closures, the National Oil Corporation said on Monday.

"Working in the opposite direction of the Norwegian oil workers strike and the geopolitical situation" was the update on the Syncrude oil sands facility, said Mizuho’s Yawger.

On Monday, Suncor Energy said its 360,000 bpd Syncrude facility would resume some production in July, earlier than expected, following an outage last month that disrupted total output. The disruption had sent US prices higher. The updated restart has muted US crude’s gains and helped widen the difference between the two benchmarks, said Yawger.

Meanwhile, Saudi Arabia, fellow members of oil cartel Opec and allies, including Russia, agreed last month to increase output to dampen price gains and offset global production losses. However, the market has grown concerned that if Saudi Arabia offsets Iranian losses, it will use up global spare capacity and leave markets vulnerable to further or unexpected production declines.