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Oil rises on Iran sanctions, lower U.S. fuel inventories

Oil prices rose on Thursday, extending gains on growing evidence of disruptions to crude supply from Iran and Venezuela and after a fall in U.S. crude inventories.

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Benchmark Brent crude oil was up at 77.74 dollars. U.S. light crude was 40 cents higher at 69.91 dollars.

Iranian crude exports are likely to drop to a little more than 2 million barrels per day (bpd) in August, against a peak of 3.1 million bpd in April, as importers bow to American pressure to cut orders.

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“The oil market is once again tightening,” said Giovanni Staunovo, analyst at Swiss bank UBS in Zurich.

“Iranian oil export declines are already visible well in advance of U.S. oil-related sanctions, which enter into force in November.”

The Organisation of Petroleum Exporting Countries (OPEC), where Iran is third-biggest producer, will discuss in December.

It will parley whether it can compensate for a sudden drop in Iranian supply after sanctions start in November, the head of Iraq’s state oil marketer SOMO, Alaa al-Yasiri, said on Wednesday.

Crude exports from crisis-struck OPEC member Venezuela have also fallen sharply, halving in recent years to about 1 million bpd.

Official U.S. oil inventory data on Wednesday also helped the bullish trend.

U.S. commercial crude inventories fell by a larger than expected 2.6 million barrels in the week to Aug. 24, to 405.79 million barrels, the Energy Information Administration said.

U.S. production C-OUT-T-EIA was flat from the previous week’s record of 11 million bpd.

The International Energy Agency (IEA) has warned of a tightening market towards the end of the year because of falling supply in countries such as Iran and Venezuela combined with strong demand, especially in Asia.(Reuters/NAN)


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