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LONDON (Reuters) – Oil prices rose on Tuesday as US sanctions weighed on Iranian crude exports, tightening global supply despite Washington's efforts to get other producers to increase production .
FILE PHOTO: View of the Equinor Oil Platform in the Johan Sverdrup Oil Field in the North Sea, Norway 22 August 2018. REUTERS / Nerijus Adomaitis / File Photo
Benchmark Brent LCoC1 crude oil rose 50 cents to $ 77.87 per barrel at 0750 GMT. US light crude CLc1 was 15 cents higher at $ 67.69.
"The trend of least resistance to oil prices, given the fundamentals of supply, remains unchanged," said Harry Tchilinguirian, oil strategist at BNP Paribas, Reuters Global Oil Forum.
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.
"The markets are expecting substantial price pressure as Iran imposes its sanctions," said Stephen Innes, head of Asia-Pacific trading at OANDA futures broker in Singapore.
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.
Their combined production has increased by 3.8 million bpd since September 2014, more than the peak reached by Iran in the last three years.
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.
With the tightening of crude markets in the Middle East, many Asian refiners 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.
This is one of the reasons why the US crude discount from Brent has widened to about $ 10 a barrel, the largest since June, according to the LCO-CLFVMc1.
US crude oil exports to Asia: tmsnrt.rs/2CITKcJ
Iranian crude exports to Asia: tmsnrt.rs/2NDV3Os
Discount US Brent crude: tmsnrt.rs/2CEdfTu
Report by Christopher Johnson to LONDON and Henning Gloystein to SINGAPORE; edited by Jason Neely
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