Oil prices rose on Friday, rallying on concerns that USA sanctions against Iran would remove a substantial volume of crude oil from world markets at a time of rising global demand.
At the Multi Commodity Exchange, crude oil for delivery in far-month August rose by Rs 11 or 0.24 per cent to Rs 4,615 per barrel in a business turnover of 57 lots.
The tightness in global and United States supplies isn't likely to be helped by production outages in Libya and Canada, as well as the limited ability of other OPEC countries to up their production capacity in such a short space of time, which suggests we could see USA crude head towards $76 a barrel in short order on any break through the highs of earlier this year.
Tech stocks rebounded from a sharp sell-off on Monday, after USA government officials said plans were in the works to block firms with at least 25 percent Chinese ownership from buying US companies with "industrially significant technology".
"The significant risk to this forecast is that production in Iran or Venezuela collapses, which could offset all of the increase in output from the rest of OPEC and Russian Federation, resulting in a much tighter market", he said.
Brent crude futures LCOc1 were at $76.60 per barrel at 0111 GMT, up 29 cents, or 0.4 percent, from their last close, Reuters reports. That was before the U.S. announced restrictions on Iranian exports that were tighter than most analysts were expecting. Who is OPEC and how are these decisions affecting us?
The American Petroleum Institute reported a much-higher-than-expected 9.2 million barrel fall in USA crude inventories in the week to June 22 to 421.4 million barrels.
"Despite the OPEC agreement (last week) we believe that tight supply is likely to drive oil prices higher during 2018", said Jason Gammel of USA investment bank Jefferies. The variables driving the market higher are the supply disruptions in Libya and Canada because these two events are likely to reach a conclusion in the short-term. Both banks cited limited spare production capacity as the reason for the increase in price forecasts.
Iran pumps about 4.7 million barrels per day (bpd), or nearly 5 percent of total output, much of it to China and other energy-hungry nations such as India.
Prime Minister of Iraq Haider al-Abadi stated on Wednesday that his country would cooperate with members of the Organization of the Petroleum Exporting Countries (OPEC) and states outside of the organization to maintain the stability of oil prices and prevent sharp increases, despite his opposition to the plan.
Saudi Arabia, the world's largest oil exporter, told OPEC it pumped 10.03 million barrels a day in May.
Mr Zanganeh had initially objected to any adjustment to OPEC's pact with 10 allies led by Russian Federation to cut output by 1.8 million b/d arguing that negotiations had been tainted by President Donald Trump's complaints over high prices.
Coincidentally, as Bloomberg broke the news about the imminent Saudi boost, a State Department official said that the U.S.is pushing allies to cut oil imports from Iran to zero by November 4, adding that the US isn't granting waivers on Iranian oil imports ban. He criticized the cartel again in May and after last week's meeting, where OPEC and non-members agreed to raise production by 1 million bpd.
Thomas Pugh, a commodities economist at the London-based Capital Economics, wrote in a note that OPEC is now producing nearly 1 million bpd below its collective quota; and Saudi Arabia, Kuwait, the United Arab Emirates and Qatar collectively produced about 900,000 bpd less in May than they did in December 2016.