WTI, Brent Prices Curbed by Higher OPEC Supply

Oil prices rose on Monday, supported by concerns that falling Iranian output will tighten markets once US sanctions bite from November, but gains were limited by higher supply from OPEC and the United States.

Brent crude oil LCOc1 went up 45 cents at $78.09 a barrel. US crude CLc1 was 15 cents higher at $69.95, CNBC reported.

The two benchmarks have risen strongly over the last two weeks with Brent gaining more than 10% on expectations that global supply will tighten later this year.

“Exports from OPEC’s third-biggest producer are falling faster than expected and worse is to come ahead of a looming second wave of US sanctions,” said Stephen Brennock, analyst at London brokerage PVM Oil Associates. “Fears of an impending supply crunch are gaining traction.”

Stephen Innes, the head of trading for Asia-Pacific at brokerage OANDA, said Brent was “supported by the notion that US sanctions on Iranian crude oil exports will eventually lead to constricted markets”.

Edward Bell, analyst at Emirates NBD bank in Dubai, said Iranian production is already showing signs of decline, falling by 150,000 bpd last month, as importers of Iranian barrels will be moving away from taking shipments.

But global oil markets are still fairly well supplied.

Production by the Organization of Petroleum Exporting Countries rose 220,000 barrels per day in August to a 2018 high of 32.79 million bpd, a Reuters survey showed.

Output was boosted by a recovery in Libyan production and as Iraq’s southern exports hit a record high.

US drillers added oil rigs for the first time in three weeks, increasing the rig count by 2 to 862. The high rig count has helped lift US crude production by more than 30% since mid-2016 to 11 million bpd.

Oman’s Oil Minister Mohammed bin Hamad al-Rumhi said on Monday he expects oil prices to remain between $70-80 a barrel this year, Omani news website WAF reported on Twitter.

Saudi Arabia, Kuwait and the UAE are the only three countries that have the capacity to increase oil production, he said at an oil conference in Oman.

OPEC and its allies pledged on June 22-23 to return to 100% compliance with their agreement to reduce their combined output by 1.8 million bpd. The pact was first implemented in January 2017.