Oman Daily Observer

Oil rises on Iran sanctions, lower US fuel inventorie­s

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LONDON: Oil prices rose on Thursday, extending gains on growing evidence of serious disruption­s to crude supply from Iran and Venezuela and after a fall in US crude inventorie­s.

Benchmark Brent crude oil LCOC1 was up 30 cents a barrel at $77.44 by 07:45 GMT. US light crude CLC1 was 30 cents higher at $69.81.

Brent has risen by almost 10 per cent over the last two weeks on widespread perception­s that the global oil market is tightening and may run short in the next few months as US sanctions restrict crude exports from Iran.

“Sanctions against Iran are beginning to impact oil supply, lifting crude prices,” said Alfonso Esparza, analyst at futures brokerage OANDA.

Iranian crude exports will likely drop to just over 2 million barrels per day (bpd) in August, versus a peak of 3.1 million bpd in April, as importers bow to American pressure to cut orders.

The Organizati­on of the Petroleum Exporting Countries, of which Iran is the third-biggest producer, will discuss in December whether it can compensate for a sudden drop in Iranian supply after sanctions start in November, the head of Iraq’s state oil marketer SOMO, Alaa al-yasiri, said on Wednesday.

Crude exports from crisisstru­ck OPEC member Venezuela have also fallen sharply, halving in recent years to around 1 million bpd. Official US oil inventory data on Wednesday also helped the bullish trend.

US commercial crude inventorie­s fell by 2.6 million barrels in the week to August 24, to 405.79 million barrels, more than forecast, the Energy Informatio­n Administra­tion said. US production was flat from the previous week’s record of 11 million bpd.

The Internatio­nal Energy Agency (IEA) has warned of a tightening market towards the end of the year, due to a combinatio­n of falling supply in countries such as Iran and Venezuela, and strong demand especially in Asia.

BNP Paribas global oil strategist Harry Tchilingui­rian saw a combinatio­n of supply risks: “As Iranian oil exports are lost to the market, Venezuelan production continues to decline, Angola struggles to maintain output, and Libya is subject to episodic outages,” Tchilingui­rian told Reuters Global Oil Forum.

 ?? — Reuters ?? A pump jack operates at sunset in an oil field in Midland, US.
— Reuters A pump jack operates at sunset in an oil field in Midland, US.

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