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Oil gains on OPEC report; U.S. crude discount to Brent deepens

Oil gains on OPEC report; U.S. crude discount to Brent deepens

Reuters quoted Saudi Arabia as saying that it could raise its oil output to offset any potential supply shortage as a result of new sanctions on Tehran, after U.S. President Mr Donald Trump said Washington was withdrawing from the Iran nuclear deal.

"Such elevated oil geopolitical risks exacerbate the upside risks to Brent forecasts and reinforce our view that oil price volatility will continue to increase", the investment bank's analysts wrote.

Last week's news about new sanctions on Iran will be long-term bullish if it leads to a supply shortage as widely expected, however, it may take as many as 180-days before the effects of the cut in supply are actually felt.

"For the moment, investors are cautious to any sort of supply disruption, considering the tightness that we're seeing".

Despite this, OPEC's latest report said producers were cutting more than required under the deal, while producers not party to the agreement, such as usa shale companies, were starting to face constraints on future output.

West Texas Intermediate crude rose 26 cents to settle at $70.96.

OPEC sources said Thursday it's way too early to decide whether to pump more oil to offset an expected drop in supply from Iran after the new USA sanctions are in place, Kallanish Energy learns.

"Trump's decision will not have any impact on our oil export", the minister said on state television.

Trying to ease market concerns, Saudi Arabia on Wednesday said it would work with other producers to lessen the impact of any shortage in oil supplies.

The futures on US WTI crude oil with delivery in June fell by 0.11% to 71.28 Dollars per barrel.

The main goal of the supply deal was to reduce excess oil stocks to the five-year average.

The higher crude prices that have followed have prompted growth in rival supply and a flood of US shale output. That may put in jeopardy an existing agreement among OPEC and non-OPEC nations to curb output.

This is the first time Chile has imported Iranian crude in nearly 18 months, according to data from S&P Global Platts trade flow software cFlow. This is 27% over mid-2016 and means that USA production is getting closer to that of Russian Federation, which is largest oil producer with about 11 million barrels per day.

USA light crude CLc1 was down 66 cents at $70.70, off a 3-1/2 year high of $71.89 it hit on Thursday.

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