Oil prices rose on Tuesday as U.S. sanctions squeezed Iranian crude exports, tightening global supply despite efforts by Washington to get other producers to increase output.
Benchmark Brent crude oil LCOc1 was up 50 cents at $77.87 a barrel by 0750 GMT. U.S. light crude CLc1 was 15 cents higher at $67.69.
“The path of least resistance for oil prices, given the supply fundamentals, remains up,” Harry Tchilinguirian, oil strategist at BNP Paribas, told Reuters Global Oil Forum.
Washington has told its allies to reduce imports of Iranian oil and several Asian buyers, including South Korea, Japan and India appear to be falling in line.
But the U.S. government does not want to push up oil prices, which could depress economic activity or even trigger a slowdown in global growth.
U.S. Energy Secretary Rick Perry met Saudi Energy Minister Khalid al-Falih last Monday in Washington, as the Trump administration encourages big oil-producing countries to keep output high.
“Markets … are expecting substantial price pressure as Iran sanctions loom,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA in Singapore.
Russia, the United States and Saudi Arabia are the world’s three biggest oil producers meeting around a third of the world’s almost 100 million barrels per day (bpd) of daily crude consumption.
Their combined output has risen by 3.8 million bpd since September 2014, more than the peak output Iran has managed over the last three years.
Russian Energy Minister Alexander Novak said on Tuesday that Russia and a group of producers around the Middle East which dominate the Organization of the Petroleum Exporting Countries may sign a new long-term cooperation deal at the beginning of December 2018.