Oil slips as economic concerns counter tightening supplies

Oil prices climb as Iran sanctions loom

Oil prices rose on Tuesday as USA sanctions squeezed Iranian crude exports, tightening global supply despite efforts by Washington to get other producers to increase output.

US crude inventories fell by 5.3 million barrels in the last week, the US Energy Information Administration said on Wednesday.

US crude stocks fell by 8.6 million barrels in the week to September 7 to 395.9 million, the American Petroleum Institute (API) said on Tuesday.

"Market participants are now evaluating this development in conjunction with potential for further declines in oil output from Iran and Venezuela, which portrays a significantly bullish picture on prices", said Abhishek Kumar, senior energy analyst at Interfax Energy in London.

US sanctions on Iran's energy industry, which come into force in November, have already cut supply back to two-year lows, while falling Venezuelan output and unplanned outages elsewhere will also keep the balance between supply and demand tight, the IEA said.

Washington has told its allies to reduce imports of Iranian oil and several Asian buyers, including South Korea, Japan and India appear to be falling in line.

Benchmark Brent crude futures rose 47 cents to $79.53 a barrel, by 1649 (GMT).

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He also warned of the impact of United States sanctions against Iran: "This is a huge uncertainty on the market - how countries, which buy nearly 2 million barrels per day of Iranian oil, will act".

"This is a huge uncertainty on the market how countries, which buy nearly 2 million barrels per day (bpd) of Iranian oil, will act". Oil production has been hit by attacks on oil facilities and blockades, though previous year it partially recovered to around one million barrels per day.

S&P global Platts said OPEC, in a report, indicated demand for the organization's own crude oil in September will be nearly 1 million bpd more than the level produced in August.

Demand for crude from the Organization of the Petroleum Exporting Countries will moderate in 2019 to 31.9 million bpd, from an estimated 32.3 million bpd this year, the IEA said.

"Saudi Arabia, OPEC's largest producer, saw its output rise modestly to 10.40 million bpd, up 38,000 bpd from the previous month, according to secondary sources, S&P Platts reported".

The United States and China have imposed a series of tariffs on each other's goods since May that have unnerved equity markets, while a rising US dollar has put emerging market currencies under pressure, raising the energy bill for some of the world's largest oil importers.

But it said rising demand could also be checked.

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