Oil edges up on supply concerns

Iran OPEC chief: 'Saudi and Russia are taking oil market hostage'

Oil prices were steady on Wednesday as concerns that producers will not be able to respond to a shortfall in supply once US sanctions on Iran are enacted outweighed a gain in stockpiles in the United States, the world's biggest oil user.

OPEC has stated it will help to ensure global oil market stability, raising questions about how much longer the Vienna accord will remain in place.

An adviser to Iran's oil minister said on Tuesday that expected USA sanctions on Iran's energy sector could not reduce the country's oil sale to zero because of high demand levels in the market, state TV reported.

Brent crude on Tuesday jumped 2 percent to an intraday high of $79.73 a barrel, after touching $80.13 a barrel earlier this month.

At 0936 GMT, November WTI Crude Oil is trading $69.60, up $0.92 or +1.34% and December Brent Crude Oil is at $78.65, up $1.06 or +1.37%. Reuters reported on September 5 that Saudi Arabia wants oil to stay between $70 and $80 a barrel to keep a balance between maximising revenue and keeping a lid on prices until U.S. congressional elections.

"As oil sanctions against Iran take effect, perhaps in combination with production problems elsewhere, maintaining global supply might be very challenging and would come at the expense of maintaining an adequate spare capacity cushion", IEA said in its monthly Oil Market Report.

"The brinkmanship between Beijing and Washington has the potential to severely impact the competitiveness of US crude oil and petroleum products in the Chinese market, and it will also deter Chinese investment in the USA energy sector", said Abhishek Kumar, senior energy analyst at Interfax Energy in London.

The producer group said in June that it would agree to some supply increases starting in July, though the specific targets were not announced at the time.

China, one of the world's largest oil consumers, on Tuesday added $60 billion of USA products to its import tariff list. Concern over supply overshadowed a surprise increase in United States oil inventories.

Stockpiles of distillate fuels, which include diesel and heating oil, rose by 1.5 million barrels, the API data showed, compared with expectations for a 651,000-barrel gain.

OPEC members received approximately US$567 billion in net oil export revenues in 2017, up 29% from revenues in 2016, according to the US Energy Information Administration (EIA).

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