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.”

"Trade wars 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."

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.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

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.