Oil prices increased as concerns over a gap in supply, due to US sanctions on Iran, outweighed an increase in US stockpiles.
Brent crude futures LCOc1 increased by 2 cents to reach $79.05 a barrel, while US crude futures CLc1 inched up by 15 cents to stand at $70, reported Reuters.
Top oil producer Saudi Arabia is reportedly comfortable with prices scaling more than $80.
PVM Oil Associates strategist Tamas Varga said was quoted by Reuters as saying: “Whether or not this (price) development was justified, it is a supply-side development and the market has reacted to it.
“Trade wars, if anything, should impact oil demand, but that’s being completely ignored, which goes to tell me that the market is much more sensitive to supply-side developments…I think that is going to remain the theme for the next six weeks until the next round of U.S. sanctions against Iran kick off.”
The Organization of the Petroleum Exporting Countries (OPEC) and other major oil producers, including Russia, will meet this Sunday in Algeria to discuss how to increase supply within their quota structure to fill the gap caused by reduced supply from Iran.
US oil sanctions on Iran will come into force on 4 November. Several buyers have reduced their purchases, but it is not clear yet on how the other producers would fill in this supply gap.
Meanwhile, US crude inventories grew by 1.2 million barrels to reach 397.1 million last week, according to the American Petroleum Institute said.
An official inventory data will be released by the US Energy Information Administration today.