Iranian tankers sting

LONDON (Reuters) – Oil prices climbed on Monday as US drilling stagnated and investors expected a drop in supply once US sanctions against Iranian crude exports began in November.

Benchmark Brent LCoC1 crude oil rose $ 1.09 per barrel, or 1.4%, to a high of $ 77.92 and trades at $ 77.85 at 9:00 am GMT. US light crude CLc1 was 70 cents higher at $ 68.45.

"A scenario of rising oil prices is based on the decline in Iranian exports because of US sanctions, the growth of American shale production, the instability of production in countries like Libya and Venezuela, and commercial war the next 6 to 9 months, "said Harry Tchilinguirian, oil strategist at the French bank BNP Paribas.

"We are seeing Brent trading over $ 80 in this scenario," he told the Reuters Global Oil Forum.

US drillers cut two oil rigs last week, bringing the total to 860, Baker Hughes said Friday.

The number of oil drilling rigs in the United States has stagnated since May, reflecting an increase in well productivity, but also bottlenecks and infrastructure constraints.

Outside the United States, Iran's crude oil exports decline before the November deadline for the implementation of the new US sanctions.

Although many Iranian oil importers have said they oppose sanctions, few seem to be willing to challenge Washington.

"Governments can talk harshly," said energy consulting firm FGE.

"They can say that they will resist Trump and / or lobby for derogations. But in general, the companies we're talking about … say they will not take it, said FGE. "US financial penalties and the loss of shipping insurance scare everyone.

While Washington is pressuring countries to reduce their imports from Iran, it is also urging other producers to increase their production in order to contain prices.

US Secretary of Energy Rick Perry will meet with his counterparts from Saudi Arabia and Russia on Monday and Thursday, respectively, as the Trump administration urges the world's largest exporter and producer to maintain production.

Investors worry about the impact of the oil dispute between the United States and other major economies on oil demand, as well as the weakness of emerging markets.

"Trade wars, and especially rising interest rates, can create difficulties for emerging markets that drive growth in oil demand," FGE said.

Despite this, the consulting firm estimated that the likelihood of a decline in oil prices was relatively low, as the Organization of the Petroleum Exporting Countries would likely adjust production to stabilize prices.