OPEC and non-OPEC compliance with the Vienna Agreement production ceiling slipped to 97 percent in July as large producers relaxed output constraints amid falling production in crisis-hit Venezuela and expectations that Iran may be prevented from exporting oil to large parts of the globe.
With Iran's crude sales falling due to the US sanctions and countries such as Venezuela struggling to avoid outright economic collapse, it was perhaps inevitable that Mohammad Barkindo, secretary general for the Organization of the Petroleum Exporting Countries (OPEC), would tell Reuters that his cartel will keep working with other oil producers to manage global supplies in the face of demand for crude facing "headwinds". Data from the InterContinental Exchange shows open interest in calls that give the owner the right to buy Brent futures at $80 and $85 by next week grew by almost 45 per cent on Monday and Tuesday to an equivalent of 54 million barrels of oil.
Opec with a group of non-Opec producers that includes Russian Federation started withholding oil supplies in 2017 to end a global glut and prop up prices. Energy ministers of Saudi Arabia, a U.S. ally, and Russian Federation said in May they were prepared to ease output cuts to calm consumer worries about supply.
Mr Barkindo did not, however, address how the global oil industry immediately can replace Iranian crude supplies in an already-tight market.
Bloomberg reported that while Saudi Arabia had no desire to push prices higher than $80, it may no longer be possible to avoid it. USA sanctions affecting Iran's petroleum sector are due to come into force from November 4.
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U.S. crude inventories rose by 1.2 million barrels to 397.1 million in the week to Sept 14, according to data released on Tuesday by the American Petroleum Institute (API).
Increases in both crude oil prices and in net OPEC oil exports drove revenues higher in 2017, and the EIA expects that revenues will continue to increase in 2018, based on its August 'Short-Term Energy Outlook'.
The supply concerns outweighed an increase in oil inventories in the United States reported late on Tuesday. USA crude stockpiles rose by 1.2 million barrels to 397.1 million in the week to September 14, the American Petroleum Institute said.
Official U.S. government data is due to be released on Wednesday.
"Overnight chatter suggests that the Saudis are more than happy with a Brent price above $80 or that OPEC, more generally, is not considering raising output".