Oil prices crept up on Friday as investors attempted to gauge the potential impact on supply from looming sanctions by the United States on Iran’s crude exports.
The most-active Brent crude futures contract to be delivered in December was higher 15 cents, or 0.2 percent, at $81.53 per barrel.
The front-month November contract is set to expire later on Friday and is at $81.73 per barrel. The contract increased to four-year high of $82.55 on Tuesday. Brent is seen to be rising 5.6 percent in September, just on track for the largest monthly gain since April.
US West Texas Intermediate (WTI) futures were higher 19 cents, or 0.3 percent, at $72.32 per barrel. It is set to increase 3.6 percent this month, the largest increase since June.
“The market has been focusing on trading headlines on the Iran sanctions for a whole week. But views on how much OPEC and Russia can make up for the losses vary,” stated Chen Kai, who is the head of commodity research at Shengda Futures.
The sanctions on Iran, the third largest producer in the Organization of Petroleum Exporting Countries, will take effect on November 4, with Washington demanding buyers of Iranian oil to slash imports to zero to compel Tehran to negotiate a new nuclear agreement and diminish its influence in the Middle East.
Worries surrounding the sanctions had also resulted to widening difference between the WTI and Brent Prices at it created positive conditions for US oil exports.
“Oil exporters will take advantage of the looming discount with heightened buying activities on the WTI benchmark,” said Benjamin Lu from Philip Futures in a note.
Meanwhile, Saudi Arabia is expected to silently add additional oil to the market over the next couple of months to offset the drop in Iranian production, but it is worried that it might be compelled to limit output next year to balance global supply and demand as the United States continues to pump more crude.
Two sources with direct knowledge of the OPEC policy said that Saudi Arabia along with other producers have talked about a possible increase of about 500,000 barrels each day among OPEC and non-OPEC producers.
On the other hand, ANZ said in a note on Friday that key suppliers were unlikely to offset losses because of the sanctions estimated at 1.5 million barrels per day.
At its zenith in May, Iran exported 2.71 million barrels per day, almost 3 percent of daily global crude consumption.
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