Oil surges as global supply risks eclipse planned Saudi output hike

Crude rose to the highest NEW YORK in a month as U.S. pressure on allies to stop importing from Iran overshadowed a looming surge in Saudi Arabia’s production.

Futures rose 3.6 per cent in New York amid growing supply concerns. The U.S. pushed allies to cut Iran oil imports to zero by November, a militia leader in Libya handed over control of some of the country’s biggest crude-exporting terminals and an oilsands upgrader in Canada may be shut for a month. Earlier, prices fell briefly after Saudi Arabia was said to plan to pump a record amount of crude in July.

“Even if Saudi Arabia is ramping up, there’s enough concern in the market about production shutdowns, whether it’s Canada, Libya, to hold these prices up,” said Rob Haworth, who helps oversee US$151 billion at U.S. Bank Wealth Management in Seattle. “It’s a market that still has a bullish bias to it.”

In Libya, forces loyal to Khalifa Haftar, a commander in the politically divided nation, turned over ports with an export capacity of 800,000 barrels a day to the Na- tional Oil Corp. in Benghazi.

Some of the Libyan ports are going to be “administered by the wrong person at this point,” said Bob Yawger, director of futures at Mizuho Securities USA Inc. in New York. “That could be a problem. It looks like those barrels won’t have the blessing of the UN.”

West Texas Intermediate crude for August delivery advanced US$2.45 to US$70.53 a barrel in New York. Total volume traded was about 20 per cent above the 100-day average. Brent futures for August settlement rose US$1.58 to end the session at US$76.31 a barrel on the London-based ICE Futures Europe exchange. Brent traded at a US$5.78 premium to WTI.

State oil company Saudi Aramco aims to boost production next month to about 10.8 million barrels a day, according to people briefed on the matter, who asked not to be named discussing confidential information. That would surpass the previous high of 10.72 million barrels a day in November 2016.

Saudi Arabia is under pressure from the White House to pump more crude to alleviate high prices before the U.S. midterm elections in November. Domestic oil use surges during summer months.