Oil takes a breather after strong week

calgary — Oil slipped, narrowing a second weekly gain, as traders consider the potential supply impact of renewed US sanctions on Iran.

Futures in New York dipped back below $71 a barrel Friday, trimming this week’s increase to 1.4 per cent. Saudi Arabia is ready to work with other producers to mitigate any impact of a shortage after US President Donald Trump decided to exit a 2015 nuclear accord and hit Opec’s third-largest producer with sanctions intended to curb its exports. US crude production pushed to a fresh all-time high as explorers put the most drilling rigs to work in 3 1/2 years.

Crude’s recent rally has been driven by a deepening regional conflict in the energy-rich Middle East and Trump’s hawkish stance on Iran. Goldman Sachs Group said the sanctions could push prices above its forecasts and Bank of America Corp sees a possibility oil could rise to $100 a barrel next year.

“There is at least a narrative building out there that Opec is more likely than not going to signal to the market that it is willing to increase production to compensate for any losses to world supply from these sanctions,” said Bart Melek, head of global commodity strategy at TD Securities in Toronto.

West Texas Intermediate crude for June delivery fell 66 cents to settle at $70.70 a barrel on the New York Mercantile Exchange. Total volume

$77.12 per barrel was the price of Brent futures in London

traded was about 2.3 per cent below the 100-day average.

Brent for July settlement slipped 35 cents to $77.12 a barrel on the London-based ICE Futures Europe exchange. Prices gained 3 per cent this week. The global benchmark crude traded at a $6.44 premium to July WTI.

Futures for September delivery on the Shanghai International Energy Exchange dropped 1.1 per cent to 471.2 yuan a barrel. The contract is up 5.4 per cent this week, heading for a fifth straight weekly advance.

Some refiners and oil traders are already starting to look for alternatives to Iranian barrels. China’s Ministry of Commerce said on Friday it’s engaged in mutually beneficial oil trading with Iran based on commercial factors, without elaborating whether it was going to persist with or curb imports. The US has given buyers 180 days to wind down shipments from the Middle East producer to avoid penalties.

“Supply concerns have lifted oil prices,” said Norbert Ruecker, head of market and commodity research at Julius Baer Ltd in Zurich. “We see the main impact on the oil price through the market mood — geopolitical noise and escalation fears.”