Global benchmark Brent crude stabilized near 3-1/2-year highs on Friday as the prospect of new US sanctions on Iran tightened the outlook for Middle East supply at a time when global crude production is only just keeping pace with rising demand, Reuters reported.
US crude slipped slightly as domestic production continues to surge.
The United States plans to reintroduce sanctions against Iran, which pumps about 4 percent of the world’s oil, after abandoning a deal reached in late 2015 that limited Tehran’s nuclear ambitions in exchange for the removal of US and European sanctions.
The global oil market is balanced, with top exporter Saudi Arabia and No.1 producer Russia having led efforts to curb oil supply to prop up prices.
“It’s the same witches brew of bullish stuff: Iran, Venezuela, the lack of alacrity by Saudi Arabia to bring more oil onto the market,” said John Kilduff, partner at Again Capital in New York.
Prices may strengthen later in the day as traders shore up their positions, he said. “It’s definitely not an environment to go home short over the weekend.”
Brent crude LCOc1 was flat at $77.47 a barrel by 1:33 p.m. EDT [1733 GMT], just below the $78-level it hit on Thursday, its highest since November 2014.
US light crude CLc1 was down 16 cents at $71.20, having touched a 3-1/2 year high of $71.89 on Thursday.
For the week, Brent was on track for a 3.5-percent gain and US crude a 2.3-percent rise.
Many analysts expect oil prices to rise as Iran’s exports fall.