London – Oil prices rose on Thursday, driven by the prospect of a shortfall in global supply once U.S. sanctions against major crude exporter Iran come into force in just five weeks time.
U.S. President Donald Trump this week demanded that OPEC raises production to prevent further price rises ahead of key congressional elections in early November.
Analysts say the Organisation of the Petroleum Exporting Countries and partner Russia appear unlikely at this point to respond immediately to Trump’s demands.
Meanwhile, U.S. Energy Secretary Rick Perry has also ruled out using U.S. strategic crude reserves as a means of lowering the price.
The most-active December Brent sweet crude futures contract was up at 81.38 dollars a barrel.
The front-month November contract expires on Friday.
U.S. futures were up at 71.93 dollars a barrel.
“On paper, you could argue that the technical and fundamental perspective points to higher prices, so I think that will carry on into next week and further out,” Saxo Bank senior manager Ole Hansen said.
“100 dollars dollars barrel,…Already at 80 dollars, we are seeing emerging-market local oil prices pretty close to where we peaked a few years ago ….”
Estimates of how much Iranian crude could disappear from the market once U.S. sanctions come into force on Nov. 4 vary widely among the analyst community, from 500,000 barrels per day (bpd) all the way to two million bpd.
At its 2018 peak in May, Iran exported 2.71 million bpd of crude oil, equivalent to nearly three percent of daily global consumption.
OPEC has little spare capacity to make up for any drop in exports from Iran, which is the group’s third-largest producer.
U.S. crude production C-OUT-T-EIA hit a record 11.1 million bpd in the week ending Sept. 21, according to data from the Energy Information Administration (EIA) on Wednesday.
That is an increase of almost a third since mid-2016.
Commercial crude stocks C-STK-T-EIA rose by 1.85 million barrels, to 395.99 million barrels, the EIA data showed.