NEW YORK: Oil prices gained more than 1 percent on Friday, ending a run of weekly declines on signs that Iran sanctions may limit global supply and that a trade war may not curb China’s appetite for U.S. crude.
Brent crude oil settled up $1.09 a barrel, or 1.5 percent, at $75.82 a barrel. U.S. crude was up 89 cents, or 1.3 percent, at $68.72.
U.S. crude rose more than 4 percent on the week, after seven consecutive declines, and Brent rose 5.3 percent after three weeks of falling prices.
Concerns that an escalating trade war between China and the U.S. could slow economic growth and weigh on crude purchases eased slightly after sources told Reuters that China’s Unipec will resume purchases of U.S. crude oil in October, after a two-month halt due to the fight.
Worries that Mexico’s incoming administration would not strike a bilateral agreement over NAFTA with the U.S. also weighed on the market, traders said. A dispute over opening up the oil and gas sector is weighing on the talks, Bloomberg reported, citing two people familiar with negotiations.
At the same time, concerns about global crude supply intensified with signs that U.S. sanctions on Iran are curbing shipments.
The U.S. government reimposed sanctions on Iran this month after withdrawing from a 2015 international nuclear deal, which Washington saw as inadequate for curbing Tehran’s activities in the Middle East and denying it the means to make an atomic bomb. Tehran says it has no ambitions to make such a weapon.
Iran is the third-biggest producer in the Organization of the Petroleum Exporting Countries, supplying around 2.5 million barrels per day (bpd) of crude and condensate to markets this year, equivalent to about 2.5 percent of global consumption.
Energy consultancy FGE says it expects Iran’s crude and condensate exports to drop below 1 million bpd by mid-2019.
A key index of the dollar versus a basket of other currencies fell on Friday, boosting the price of oil and other dollar-denominated commodities.
The dollar fell after Federal Reserve Chair Jerome Powell said steady rate hikes are the best way to protect the U.S. economic recovery.
U.S. energy companies cut nine oil drilling rigs this week, the biggest reduction since May 2016, General Electric Co’s Baker Hughes energy services firm said. Changes in the rig count serves as an indicator of future production trends. RIG-OL-USA-BHI
Traders kept an eye on the North Sea, where workers on three oil and gas platforms plan to strike next month. Oil production will stop during the strikes. The three fields contribute about 45,000 to 50,000 bpd to the North Sea’s Forties and Brent crude streams.