Economy

IEA warns of higher oil prices as Iran, Venezuela losses deepen

IEA warns of higher oil prices as Iran, Venezuela losses deepen

US West Texas Intermediate (WTI) crude futures rose 93 cents to $70.18 a barrel, a one-week high.

Oil futures rose on Wednesday, with Brent reaching $80 a barrel, after a larger-than-expected drop in U.S. crude inventories and as United States sanctions on Iran added to concerns over global oil supply.

Under the previous round of sanctions on Iran, OPEC's third-largest producer had used this strategy-keeping oil in floating storage off its coasts-when the US and European sanctions in 2012-2016 cut its ability to export 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.

Novak said global oil markets were "fragile" due to geopolitical risks and supply disruptions. Perry will meet with Russian Energy Minister Alexander Novak today (Thursday) in Moscow.

Russia, the United States and Saudi Arabia are the world's three biggest oil producers by far, meeting around a third of the world's nearly 100 million barrels per day (bpd) of daily crude consumption.

Their combined output has risen by 3.8 million bpd since September 2014, more than the peak output Iran has managed over the last three years.

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Russian energy minister Alexander Novak on Wednesday warned of the impact of US sanctions against Iran. Novak did not provide details.

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.

A group of producers around OPEC and Russian Federation have been voluntarily withholding supplies since January 2017 to tighten markets, but with crude prices up by more than 40 percent since then and markets significantly tighter, there has been pressure on Russian Federation and OPEC to raise output.

Major Japanese refiners were said last week to have officially notified Iran that they would halt all imports of Iranian oil for October while they wait for the Japan-U.S. talks on Iranian oil importers to make a permanent decision on how to proceed in November.

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.

"The price range for Brent of $70-$80 per barrel in place since April could be tested", it said.

U.S. crude stocks fell by 8.6 million barrels in the week to September 7 to 395.9 million, the American Petroleum Institute (API) said on Tuesday, while the U.S. Energy Information Administration (EIA) cut its forecast for U.S. crude output growth in 2019.