BEIJING: Oil prices inched up on Wednesday as concerns that producers may not be able to cover a shortfall in supply once US sanctions on Iran kick in outweighed a gain in US stockpiles.
Brent crude futures were up 16 cents at $79.19 per barrel at 0658 GMT, after rising 1.3 per cent in the previous session. US West Texas Intermediate (WTI) crude futures were up 20 cents, or 0.29 per cent, at $70.05 a barrel, having climbed 1.4 per cent the day before.
Prices rose on Tuesday amid media reports that Saudi Arabia, the world’s largest oil exporter, was comfortable with prices climbing above $80 a barrel.
Reuters reported on September 5 that Saudi Arabia wants oil to stay between $70 and $80 a barrel to keep a balance between maximising revenue and keeping a lid on prices until US congressional elections.
The Organization of the Petroleum Exporting Countries (Opec)and non-Opec producers, including the world’s biggest producer Russia, are meeting on September 23 in Algeria to discuss how to allocate supply increases within their quota framework to offset the loss of Iranian oil supply.
US sanctions affecting Iran’s petroleum sector will come into force from November 4, though many buyers have already curbed their purchases, raising questions about how the market will make up the lost supply.
“(Traders took the Saudi comments) as a sign that they (Saudi Arabia) won’t be aggressively responding to the rise in prices with supply increases of its own,” ANZ bank said in a note on Wednesday.
“It may also suggest they don’t have the ability to make up for the losses that are already stemming from impending US sanctions on Iran.”
Opec and non-Opec producers Russia started withholding oil supplies in 2017 to end a global glut and prop up prices. — Reuters
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