Oil prices near $80 a barrel as concern grows over global supply

Crude Oil

Crude Oil

Worldwide oil benchmark, Brent crude, extended its gains on Wednesday, trading near a two-month high as shrinking oil inventories pointed to an increasingly tight global market.

Since spring, when the Trump Administration said it would impose sanctions on Iran, traders have been focusing on the impact they could have on global supply. 4 date for imposing sanctions draws nearer, the premium has increased.

The bank lifted its long-term price forecast for Brent crude for the first time in 15 months due to a slowdown in supply from the world's largest oil producers.

U.S. West Texas Intermediate (WTI) crude futures were at $67.70 per barrel at 0637 GMT, up 65 cents, or 0.2 percent from their last settlement. Analysts had expected a decrease of 805,000 barrels. Furthermore, Iranian oil exports continued to decline before the USA sanctions go into effect in November to provide an additional boost to oil.

But the USA government does not want to push up oil prices, which could depress economic activity or even trigger a slowdown in global growth.

The IEA said tightening supply was putting increasing pressure on prices.

But keen not to see oil prices spike, US Energy Secretary Rick Perry met with Saudi Energy Minister Khalid al-Falih on Monday in Washington, as the Trump administration encourages big oil-producing countries to keep output high ahead of the renewed sanctions.

Total Iranian oil shipments for September-although we're just one third into the month and more tankers could leave later in September-slumped to 1.3 million bpd through September 13, compared to just above 2 million bpd in August, when Iranian exports started to fall noticeably, according to Bloomberg's data.

Russian energy minister Alexander Novak on Wednesday warned of the impact of United States sanctions against Iran.

USA crude oil production fell by 100,000 bpd, to 10.9 million bpd, as the industry faces pipeline capacity constraints. Novak did not provide details.

The Organisation of Petroleum Exporting Countries, in its monthly oil market report for September released on Wednesday, said crude oil production from Nigeria rose to 1.71 million barrels per day in August from 1.53 million bpd the previous month.

With Middle East crude markets also tightening, many Asian refiners are seeking alternative supplies, with South Korean and Japanese imports of USA crude hitting a record in September.

US oil producers are seeking new buyers for crude they used to sell to China before orders slowed because of the trade disputes between Washington and Beijing.