Oil prices have steadied as the outlook for demand weighed on the impending US sanctions on Iran.

Brent crude futures LCOc1 dropped two cents to trade at $72.19 per barrel, while October US crude futures contract CLv1 dipped seven cents, trading at $65.35, Reuters reported.

Oil markets are gripped with concerns of slowing economic growth due to the ongoing trade dispute between the US and China.

Commerzbank was quoted by the news agency as saying: “Prices are being supported by the prospect of lower oil supply from Iran.”

Meanwhile, the full impact of the Iran sanctions on the oil markets remains unclear.

Reuters noted that most of the European energy companies are expected to comply with the sanctions, while China is set to continue to purchase oil from Iran.

“Prices are being supported by the prospect of lower oil supply from Iran.”

Production increases outside the Organization of the Petroleum Exporting Countries (OPEC) are likely to make up for the potential Iranian supply cut.

The news agency cited a statement from BNP Paribas that projected a drop in oil production from OPEC to fall from an average of 32.1 million barrels per day (bpd) this year to 31.7 million bpd next year.

Traders opined that overall market sentiment remained cautious in the wake of the trade tensions between Washington and Beijing and the resultant impact on global growth and consumption of industrial goods.

JBC Energy said: “Prices remain range-bound on the competing trends of demand fears and looming Iranian sanctions. On the former, Asian markets firmed a little on a slight easing in tensions between the US and China with trade talks between the two nations taking place this week.”

Later this week, the US and Chinese officials will engage in talks to diffuse the tensions.