Oil edges up on Opec-led supply cuts as US output soars

London — Oil prices rose on Thursday on the back of ongoing oil cartel Opec-led supply cuts and US sanctions against exporters Venezuela and Iran, but gains were capped by record US crude output, rising inventories and falling estimates of global demand growth.

Brent crude futures were at $66.83 a barrel at 11.43an GMT, up 84c or 1.2%from their last close. US West Texas Intermediate (WTI) crude oil futures were at $56.82 a barrel, up 60c.

Prices were supported by efforts by Opec and allies such as Russia to cut output and tighten oil markets.

“In our view, Opec’s strategy is to rebalance the market as quickly as possible and exit the cuts by the end of June to grow production alongside shale producers in the second half of this year,” US investment bank Goldman Sachs said in a note on Wednesday.

US sanctions against the oil industries of Opec members Iran and Venezuela have also had an impact, traders said. This week, Venezuela’s state-run oil firm PDVSA declared a maritime emergency, citing trouble accessing tankers and personnel to export its oil due to sanctions.

Within the US sanctions against Iran, Washington granted its biggest buyers — mostly in Asia — waivers when the measures were re-introduced in November 2018 that would allow them to buy limited amounts of crude for another 180 days.

Washington has put pressure on these governments to gradually cut their oil imports from Iran to zero, but importers remain in talks over potential extensions, with India asking to be allowed to buy same volumes.

Surging US supply 

Despite these factors, oil remains in plentiful supply thanks to surging US production.