Oil prices rose on Tuesday due to growing supply outages, with Norway shutting one oilfield as hundreds of workers began a strike and Libya saying its production more than halved in recent months. However, crude futures sharply pared morning gains after U.S. Secretary of State Mike Pompeo said Washington will consider extending sanctions relief to some oil buyers that are still importing Iranian crude beyond a previously announced November deadline.
Benchmark Brent oil futures were up 64 cents at $78.71 per barrel by 10:52 a.m. ET (1452 GMT), after hitting a session peak of $79.51. U.S. light crude futures were up 12 cents at $73.97, backing off the day’s high of $74.70.
The U.S. State Department sent oil prices soaring two weeks ago after a senior official said the agency is pushing oil buyers to cut their imports from Iran to zero by Nov. 4.
“Come November 4th, there will be a U.S. sanction that prevents crude oil from passing from Iran to other countries,” Pompeo said in an interview with Sky News Arabia.
“We will enforce those sanctions. There will be a handful of countries that come to the United States and ask for relief from that. We’ll consider it.”
Earlier on Tuesday, Barclays said the Trump administration may find it “politically unpalatable” to force China and India to wind down all Iranian imports by November, just before Americans vote in mid-term elections.
“We assume that the government will take this more pragmatic approach, but another scenario could emerge in which with increasing trade war tensions with the US, the Chinese government facilitates purchasing more Iranian crude,” wrote Michael Cohen, head of energy markets research at Barclays.
The disruptions in Norway and Libya add to supply worries around the world. Venezuela’s production has collapsed due to a lack of investment and Iranian exports have suffered due to U.S sanctions. OPEC, meanwhile, has little capacity to fill the gap as demand for oil quickens.
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