Oil nears $80 a barrel as concern grows over global supply

Oil prices rise on lower U.S. crude inventories looming Iran sanctions

Oil prices rise on lower U.S. crude inventories looming Iran sanctions

Oil rose on Friday, clawing back some territory after prices fell by the most in a month in the previous session, as the focus returned to supply concerns ahead of a November deadline for USA sanctions on Iranian crude. Supplies at the key storage hub in Cushing, Oklahoma, rose by an estimated 900,000 barrels last week, according to a Bloomberg forecast.

The latest forecast by IEA is that production by non-OPEC members will grow by over 2 million barrels daily during 2018 and by 1.8 million bpd during 2019, due to the non-stop growth in record output by the U.S.

Both futures contracts are set to rise around 2 percent in the week.

Brent crude futures LCOc1 climbed 28 cents, or 0.4 percent, to $79.34 a barrel. The global benchmark crude's premium to WTI for the same month was at $10.31, increasing further after closing at the highest level in more than two months on Monday.

In a factsheet about the new sanctions on Iran's oil, the U.S. Treasury says that the scope of "petroleum products" includes-as defined by the U.S. EIA-"unfinished oils, liquefied petroleum gases, pentanes plus, aviation gasoline, motor gasoline, naphtha-type jet fuel, kerosene-type jet fuel, kerosene, distillate fuel oil, residual fuel oil, petrochemical feedstocks, special naphthas, lubricants, waxes, petroleum coke, asphalt, road oil, still gas, and miscellaneous products obtained from the processing of crude oil (including lease condensate), natural gas, and other hydrocarbon compounds".

Official weekly government data will be published by the U.S. Energy Information Administration (EIA) on Wednesday.

But with the crisis in Venezuela showing no sign of abating, and with new United States sanctions on Iran's oil industry set to come into force on November 4, other producers may have to ramp up production even further if they want to limit the impact on the market.

Washington has told its allies to reduce imports of Iranian oil and several Asian buyers, including South Korea, Japan and India appear to be falling in line. "The impact of the US sanctions on Iran is firmly being felt" in Europe but "the picture could not be more different on the other side of the Atlantic Ocean".

According to ship tracking data compiled by Bloomberg, Iranian oil and condensate exports were below 2.1 million bpd in August-the lowest levels since March 2016, with crude oil exports at their lowest since January this year.

"The fear is that the sanctions could be so successful that it takes more oil off the market than the OPEC and non-OPEC producers can make up for", said Andrew Lipow, president of Lipow Oil Associates in Houston.

That month Russian Federation produced 11.247 million barrels per day, a post-Soviet Union record high.

The storm could also affect the Colonial Pipeline, which transports oil through North and SC with the latter said to be in the direct path of the storm's eye.

Front month gasoline futures rose 0.5 percent on Wednesday while heating oil futures increased 0.4 percent.