Brent oil up 20 US cents but off four-year high

US sanctions on Iran, the third-largest producer in oil cartel Opec, kick in on November 4, as Washington asks buyers of Iranian oil to cut imports to zero to force Tehran to negotiate a new nuclear agreement and to curb its influence in the Middle East.

Other Opec countries have been increasing production in recent months but global inventories have been falling as supply tightens, analysts say.

Saudi Arabia is expected to add extra oil to the market over the next couple of months to offset the drop in Iranian production.

Two sources familiar with Opec policy said Saudi Arabia and other producers had discussed a possible production increase of about 500,000 barrels per day (bpd) among Opec and nonOpec producers.

However, ANZ said in a note on Friday that major suppliers were unlikely to offset losses due to the sanctions estimated at 1.5-million bpd. At its 2018 peak in May, Iran exported 2.71-million bpd, nearly 3% of daily global crude consumption.

Looking to 2019, Saudi Arabia is concerned rising US shale production could create another glut, especially if a stronger dollar and weaker emerging market economies reduce global demand for oil.

Opec forecasts that its nonOpec rivals led by the US will increase output by 2.4-million bpd in 2019 while global oil demand should grow by just 1.5-million bpd.

US crude production hit a record high of 11.1-million bpd last week, the US Energy Information Administration estimates. 

Reuters