Oil rises on supply concerns ahead of Iran sanctions deadline
London — Oil rose on Friday, clawing back some territory after prices fell by the most in a month in the previous session, as the focus returned to supply concerns ahead of a November deadline for US sanctions on Iranian crude.
Brent crude was up 25c at $78.43 a barrel by 8.10am GMT. The global benchmark fell 2% on Thursday after rising on Wednesday to its highest since May 22 at $80.13. US West Texas Intermediate (WTI) futures were up 41c at $69 a barrel after dropping 2.5% on Thursday. Both futures contracts are set to rise about 2% in the week.
"We think the oil market will have another go at pushing Brent above $80 a barrel," Harry Tchilinguirian, oil strategist at French bank BNP Paribas, told the Reuters Global Oil Forum. "The looming supply gap that the loss of Iranian oil exports represents is still ahead of us and that early November US deadline to reduced imports to zero is fast approaching."
The US is renewing sanctions on Iran after withdrawing from a nuclear deal forged in 2015 between Tehran and world powers. Washington re-imposed some of the financial sanctions from August 6, while those affecting Iran’s petroleum sector will come into force from November 4.
Indian refiners, traditionally major buyers of Iranian crude, will cut their monthly crude loadings from Iran for September and October by nearly half from earlier this year.
Supply concerns were stoked by data showing that US crude production fell by 100,000 barrels per day (bpd) to 10.9-million bpd last week as the industry faced pipeline capacity constraints.
Meanwhile, the International Energy Agency (EIA) warned on Thursday that although the oil market was tightening and world oil demand would reach 100-million bpd in the next three months, global economic risks were also mounting.
"As we move into 2019, a possible risk to our forecast lies in some key emerging economies, partly due to currency depreciations versus the dollar, raising the cost of imported energy," the agency said. "In addition, there is a risk to growth from an escalation of trade disputes."
China will not buckle to US demands in any trade negotiations, the major state-run China Daily newspaper said, while US President Donald Trump said on Twitter he felt no pressure to strike a deal with China.