'Crucial period' for oil as Iran exports shrink: IEA

'Crucial period' for oil as Iran exports shrink: IEA

Oil has climbed over the past month, with Brent in London briefly breaking past $80 a barrel, as the impending United States sanctions on Iran start removing barrels from markets, and shrinking American inventories and slowing production growth raise fears over a global supply crunch. Prices have slipped since topping US$80 this year for the first time since 2014 on expectations of more supply and weaker demand.

Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, March 24, 2016.

U.S. crude inventories C-STK-T-EIA fell 5.3 million barrels in the week to September 7 to 396.2 million barrels, the lowest since February 2015 and about 3 percent below the five-year average for this time of year, the U.S. Energy Information Administration (EIA) said on Wednesday.

Tanker data suggest Iranian crude exports are already off by about 500,000 bpd - some of it floating in tankers in the waters of the Gulf waiting to find ports to unload.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $69.84 per barrel at 0428 GMT, up 59 cents, or 0.9 percent, from their last settlement.

Iranian oil exports have fallen ahead of the planned introduction of USA sanctions on crude exports from the country that come into effect on Nov 4.

Novak said global oil markets were "fragile" due to geopolitical risk and supply disruptions, but added his country could raise output if needed.

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USA light crude pushed over $70 due to falling US crude inventories and production levels.

The EIA's most recent weekly ethanol production data shows production reached 1.087 million barrels per day the week ending August 31, up from 1.07 million barrels per day the previous week.

This means there will be less strain on other producers in making up for supply losses from Venezuela and Iran as renewed US sanctions kick in.

The West Texas Intermediate (WTI) for October delivery jumped 1.71 USA dollars to settle at 69.25 dollars a barrel on the New York Mercantile Exchange, while Brent crude for November delivery added 1.69 dollars to 79.06 dollars a barrel on the London ICE Futures Exchange.

"The situation in Venezuela could deteriorate even faster, strife could return to Libya and the 53 days to 4 November will reveal more decisions taken by countries and companies with respect to Iranian oil purchases", the IEA said.

How prices develop will also depend on demand.

"While Iranian exports have fallen by almost 500,000 barrels per day since May, shipments from Iraq and Saudi Arabia have risen by 200,000 barrels per day and 60,000 barrels per day respectively", the IEA added.

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