Oil prices rose on Friday, supported by signs that US sanctions on Iran are already reducing global crude supply.
Benchmark Brent crude oil was up 60 cents a barrel at $75.33 by 0750 GMT. Brent was on track for gains of almost 5 per cent this week. US light crude was 50 cents higher $68.33, heading for a gain on 3.8 per cent this week.
“The energy market is in a good mood and higher numbers are anticipated,” said Tamas Varga, analyst at London brokerage PVM Oil Associates.
The US government re-imposed sanctions on Iran this month after withdrawing from a 2015 international nuclear deal, which Washington saw as inadequate for curbing Tehran's activities in the Middle East and denying it the means to make an atomic bomb.
Iran is the third-biggest producer in the Organization of the Petroleum Exporting Countries, supplying around 2.5 million barrels per day (bpd) of crude and condensate to markets this year, equivalent to around 2.5 per cent of global consumption.
“Third-party reports indicate that Iranian tanker loadings are already down by around 700,000 bpd in the first half of August relative to July, which if it holds will exceed most expectations,” US investment bank Jefferies said on Friday.
“We expect that by the fourth quarter the market will be dealing with either undersupply, dwindling spare capacity - or both,” it added.
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Energy consultancy FGE says it expects Iran’s crude and condensate exports to drop below 1 million bpd by mid-2019.
Market sentiment was cautious, however, after talks between US and Chinese officials aimed at resolving an escalating trade dispute ended on Thursday with no major breakthrough.
Instead, both countries activated another round of tariffs on $16 billion worth of each other’s goods.
“Investors are likely to feel nervous as the two countries vow to step up the pressure,” ANZ bank said on Friday.
Economists say a prolonged trade war would reduce business activity in both the United States and China, and stifle world economic growth.
Despite the escalating trade war, China’s Unipec will resume purchases of US crude oil in October, sources told Reuters on Friday, after a two-month halt due to the trade dispute between the world's two largest economies.
Traders kept an eye on the North Sea, where workers on three oil and gas platforms plan to strike next month.
