Oil rises amid Saudi supply cuts, US sanctions on Iran

Oil prices rose on Monday after Saudi crude production was reported to have registered a decline in July, and as supply concerns resurfaced after the United States announced plans to resume sanctions against Iran from tomorrow.

The US has also asked other countries they to stop all imports of Iranian oil from November 4.

International benchmark Brent crude was last trading up 1.1 percent at $73.98 per barrel (bbl), while West Texas Intermediate (WTI) crude rose 1.4 percent to $69.43/bbl.

“Presumably, some market participants expect the huge drop in Iranian oil exports that is on the cards to tighten the supply situation and drive up prices,” Commerzbank said on Monday.

“Financial investors did not reduce their net long positions any further in the week to 31 July, at least,” it added.

Saudi Arabia produced around 10.29 million barrels per day (bpd) of crude in July, down nearly 200,000 bpd from June, Reuters reported last week, citing two OPEC sources.

Also providing support to the rise in prices was a fresh 24-hour strike by workers on three Total platforms in British North Sea.

The rig workers have also scheduled a 12-hour stoppage on August 13 and another 24-hour suspension on August 20.

Prices were, however, kept in check by fears of shrinking demand due to escalating trade dispute between the US and China, analysts said.

“We continue to sense a bearish tone in the energy market given potentially higher supplies into H2 2018 amid potential downside in demand should US-Sino trade tensions intensify further,” OCBC Bank said in a note.

Meanwhile, the commitment from Organization of Petroleum Exporting Countries (OPEC) to step up production if required has helped ease some concerns of a potential supply shortfall following sanctions against Iranian oil.

Write to Nadeshda Zareen at nadeshda.zareen@argaamplus.com