Oil prices have gained back some of their huge losses suffered the previous day amid the imminent US sanctions on Iran.
Front-month Brent crude oil futures LCOc1 grew 32 cents to top $76.76 a barrel, while US West Texas Intermediate (WTI) crude futures CLc1 increased by 15 cents to reach $66.58, reported Reuters.
The US sanctions on Tehran would come into force on 4 November.
Saudi Energy Minister Khalid al-Falih said that supply disruptions are expected due to US sanctions on Iran, but it is ready to increase to ‘meet any demand that materialises to ensure customers are satisfied’.
Despite assurances from Saudi Arabia, the markets remained tight because of the ever-nearing sanctions, according to analysts.
Morgan Stanley was quoted by the news agency as stating: “We still see Brent reaching $85 per barrel by year-end.”
In China, the state-owned China National Petroleum’s Bank of Kunlun will stop handling payments from Iran in November. This move indicates that the country has bowed to pressure from the US.
Kunlun is the key official route for money transfers between Beijing and Tehran.
As financial links ties between the two countries would be cut from November, Chinese oil firms will now have to look for alternative supplies.
Refinitiv Eikon trade data indicates that China bought 800,000bpd from Iran in August, which is the peak this year.
Although oil supply is tightening, the demand outlook for next year remains gloomy due to concerns of a slowing economy of China.
China plans to boost financial support for regions that would be affected by its mounting trade war with Washington. Both countries have imposed tariffs on each others’ respective goods.