Oil price nears $80, Nigeria’s output rises

Oil prices climb as Iran sanctions loom

Brent rose above $80 per barrel during the previous session for the first time since May, spurred by expectations that United States sanctions against Iran's oil exports, which will start in November, will tighten global markets.

As investors grow concerned that Iranian sanctions may leave the market short of crude oil, November Brent crude futures now trade at a premium of $0.47 over the December contract, highest since May.

Brent crude futures traded at $79.20 a barrel while US crude futures rose 61 cents to $69.86 a barrel.

"While we aren't explicitly forecasting Brent to rise to $100 a barrel, we see real risks of this happening".

US crude inventories fell 5.3 million barrels in the week to September 7 to 396.2 million barrels, the lowest since February 2015 and about 3 per cent below the five-year average for this time of year, the US Energy Information Administration (EIA) said on Wednesday.

US sanctions on Iran's energy industry, which come into force in November, have already cut supply back to two-year lows, while falling Venezuelan output and unplanned outages elsewhere will also keep the balance between supply and demand tight, the IEA said.

"Markets. are expecting substantial price pressure as Iran sanctions loom", said Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA in Singapore. "The last couple of weeks have seen the expected squeeze on Iranian crude flows taking shape, with overall outflows down markedly", consultant JBC Energy said.

More news: Trump denies pressure for trade deal as China welcomes US talks invite

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

The Economic Times (ET), an Indian daily said Iran now exports about 2 million barrels a day which is already 28% less than what they used to export in April. "The situation should be closely watched, the right decisions should be taken". Ahead of the sanctions, South Korea has become the first of Iran's top three oil importers to drop imports to zero after halting purchases in August from 194k barrels in July.

Should markets overheat and prices spike, however, Novak said Russian Federation could increase its output. "Russia has the potential to raise production by 300,000 barrels (per day) mid-term, in addition to the level of October 2016", he said.

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

Oil traders were also watching the progress of category 4 Hurricane Florence, which is expected to make landfall in the USA by Friday.

The storm is expected to make landfall on the U.S. East Coast on Friday.

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