Oil prices rose on Friday, hovering near multiyear highs, ahead of a meeting between major producers where it is expected production levels will be discussed in light of tightening supply.
Brent crude, the global oil benchmark, was up 0.8% to $78.86 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.6% at $70.74 a barrel.
A monitoring committee meeting on Sunday between the Organization of the Petroleum Exporting Countries and nonmembers, including Russia, is expected to feature discussions around offsetting lower Iranian exports with production elsewhere.
Iran’s oil shipments have fallen sharply in recent months ahead of the reinstatement of U.S. oil related sanctions in November.
“They of course will discuss what sort of coordinated response is needed provided that Iranian exports continue declining quickly,” said Bjørnar Tonhaugen, vice president of oil markets at consultancy Rystad Energy.
Iranian exports fell by around 500,000 barrels a day between April and August, according to the International Energy Agency.
An oil production platform at the Soroush oil fields in the Persian Gulf. Russia and Saudi Arabia have ramped up production this summer. Photo: raheb homavandi/Reuters
Russia and Saudi Arabia already ramped up production this summer to compensate for some of the lost Iranian barrels, however, additional production capacity may be limited analysts warned.
“We don’t expected Russia to have much additional production from where they are today,” said Mr. Tonhaugen, adding that Saudi Arabia’s total capacity is below the 12 million barrels a day that they have previously touted.
Oil prices have steadily climbed since August to trade within cents of a more than three-year high on Thursday.
Goldman Sachs forecast a near term Brent price of $80 a barrel in a note, citing strong U.S. demand growth combined with constrained domestic production, and losses from Iran due to sanctions.
Nymex reformulated gasoline blendstock—the benchmark gasoline contract—rose 0.7% to $2.03 a gallon. ICE gasoil changed hands at $691.75 a metric ton, up $4.00 from the previous settlement.
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