Benchmark Brent crude oil was up 20 cents a barrel at $77.34 by 0920 GMT. U.S. light crude was 10 cents higher at $69.61.
Brent has risen by almost 10 percent over the last two weeks on widespread perceptions that the global oil market is tightening and may run short in the next few months as U.S. sanctions restrict crude exports from Iran.
Iranian crude exports will likely drop to just over 2 million barrels per day (bpd) in August, versus a peak of 3.1 million bpd in April, as importers bow to American pressure to cut orders.
“The oil market is once again tightening,” said Giovanni Staunovo, analyst at Swiss bank UBS in Zurich. “Iranian oil export declines are already visible well in advance of U.S. oil-related sanctions, which enter into force in November.”
The Organisation of the Petroleum Exporting Countries, in which Iran is the third-biggest producer, will discuss in December whether it can compensate for a sudden drop in Iranian supply after sanctions start in November, the head of Iraq’s state oil marketer SOMO, Alaa al-Yasiri, said on Wednesday.
Crude exports from crisis-struck OPEC member Venezuela have also fallen sharply, halving in recent years to around 1 million bpd.
Official U.S. oil inventory data on Wednesday also helped the bullish trend.
U.S. commercial crude inventories fell by 2.6 million barrels in the week to Aug. 24, to 405.79 million barrels, more than forecast, the Energy Information Administration said.
U.S. production was flat from the previous week’s record of 11 million bpd.
The International Energy Agency (IEA) has warned of a tightening market towards the end of the year, due to a combination of falling supply in countries such as Iran and Venezuela, and strong demand especially in Asia.
“Definitely there are some worries that oil markets can tighten towards the end of this year,” IEA Executive Director Fatih Birol told Reuters on Wednesday.
BNP Paribas global oil strategist Harry Tchilinguirian saw a combination of supply risks.
“As Iranian oil exports are lost to the market, Venezuelan production continues to decline, Angola struggles to maintain output and Libya is subject to episodic outages,” he told Reuters Global Oil Forum.
“The path of least resistance (for prices), at least in our view, is up.” (Reuters)