Oil climbs by more than 2% because of worries about Iran and slowdown in US production growth

NEW YORK (Reuters) – Oil prices rose by more than 2 percent on Tuesday as US sanctions weighed on Iran's crude exports and US crude output in 2019 is expected to grow more slowly than expected.

Since the spring, when the Trump Administration said it would impose sanctions on Iran, crude traders have set a risk premium reflecting supply shortages that could arise when exports from the third largest OPEC are cut off. As we approach the date of imposition of the November 4 sanctions, the premium has increased.

The Brent Brut LCoC1 futures contract increased $ 1.69, or 2.2%, to $ 79.06 per barrel. West Texas Intermediate (WTI) CLc1 US crude settled $ 1.71, or 2.5 per cent, higher at $ 69.25 per barrel.

Prices rose in trade after the transaction after the American Petroleum Institute's industry data showed that US crude inventories fell by 8.6 million barrels last week, compared with a forecast of 805 000 barrels.

Official data from the US government is expected to be released on Wednesday.

Washington has asked its allies to cut Iranian oil imports and several Asian buyers, including South Korea, Japan and India, appear to be losing steam.

But the US government does not want to raise oil prices, which could depress economic activity or even cause a slowdown in global growth.

US Secretary of Energy Rick Perry met with Saudi Energy Minister Khalid al-Falih in Washington on Monday, while the Trump administration urges major oil producing countries to maintain high production. Perry will meet Russian Energy Minister Alexander Novak in Moscow on Thursday.

(GRAPHIC: Iranian oil exports to Asia: tmsnrt.rs/2CEzade)

Russia, the United States and Saudi Arabia are by far the three largest oil producers in the world, with about one-third of the roughly 100 million barrels a day of daily crude oil consumption.

Russian Energy Minister Alexander Novak said on Tuesday that Russia and a group of Middle Eastern producers who dominate the Organization of Petroleum Exporting Countries could sign a new long-term cooperation agreement , reported the TASS news agency. Novak did not provide details.

A group of OPEC and non-OPEC producers have voluntarily suspended supplies since January 2017 to tighten markets, but crude prices have risen by more than 40% and markets have tightened.

US crude production is forecast to increase by 840,000 barrels per day to 11.5 million barrels per year the previous year, up 1.02 million barrels per day to 11.7 million barrels a day, indicated the US magazine Energy Information Administration (EIA). report.

"Market players are now assessing this development along with the potential for further declines in Iranian and Venezuelan oil production, which shows a significantly bullish price picture," said Abhishek Kumar, energy analyst at Interfax Energy in London.

(GRAPHIC: American crude oil exports to Asia: tmsnrt.rs/2CJ69gA)

Monday, several armed men attacked on Monday the headquarters of the Libyan National Oil Corporation (NOC) in the capital.

The NOC continued to operate relatively normally in the chaos in Libya. Oil production was hit by attacks on oil facilities and dams, although last year it partially recovered to about one million barrels a day.

As markets in the Middle East tighten, Asian buyers are looking for alternative sources, with South Korean and Japanese imports of US crude reaching a record high in September.

US oil producers are looking for new buyers for the crude they were selling to China before orders slow down because of trade disputes between Washington and Beijing.

(GRAPHIC: US ​​crude oil is sharply reduced compared to Brent: tmsnrt.rs/2oZsRqZ)