Declining Iranian oil exports in the wake of impending US sanctions from November have lifted oil prices.
Brent crude oil futures increased 45 cents to reach $78.09 per barrel, while US crude climbed 15 cents to trade at $69.95, Reuters reported.
Prices soared as investors are worried that oil markets will experience less supply due to falling Iranian supplies.
Rising supply from the Organization of the Petroleum Exporting Countries (OPEC) and the US, however, capped the gains.
London brokerage PVM Oil Associates analyst Stephen Brennock was quoted by the news agency as saying: “Exports from OPEC’s third-biggest producer are falling faster than expected and worse is to come ahead of a looming second wave of US sanctions. Fears of an impending supply crunch are gaining traction.”
Over the last two weeks, Brent gained more than 10% owing to growing fears of a potential gap in supplies later this year.
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Oanda Asia-Pacific trading head Stephen Innes told the news agency that Brent was “supported by the notion that US sanctions on Iranian crude oil exports will eventually lead to constricted markets.”
Meanwhile, a Reuters survey indicated that OPEC production jumped 220,000 barrels per day (bpd) last month to stand at 32.79 million bpd, the highest output level so far this year from the producer group.
The hike in production was supported by a recovery in Libyan output and record levels of Iraq’s southern exports.
The US oil drill rig count has increased by two to reach 862, resulting in a more than 30% growth in the US crude production since mid-2016 to touch 11 million bpd.