Oil prices rose in trading on Friday as investors grew more concerned about tightening crude supplies on looming US sanctions against Iran and worldwide trade spats weighed down the market.  Apache photo.

Oil prices up despite rise in US rig count

On Friday, oil prices rose over 1 per cent as the market grew more concerned about crude supply shortages should the US carry out its threat to impose sanctions against Iranian crude.  As well, global trade disputes roiled investors’ concerns about slowing economic growth and a reduced demand for energy.

By the 5:11 p.m., EDT, Brent crude was up 89 cents to $72.96/barrel and US West Texas Intermediate rose 96 cents to $67.77/barrel.  The Canadian Crude Index climbed 81 cents to $40.91.

Brent is on track to fall 0.3 per cent this week and US WTI is set to fall around 1 per cent after Wednesday’s sell off.

“It’s not surprising to see a bit of a bounce back here,” Tariq Zahir told Reuters. He says he expects oil prices will be pressured by slowing US gas demand and scheduled maintenance by refiners.

“I think it now comes down to the point of what we see in demand numbers.”

Also, the US Energy Information Administration reported US crude stocks fell last week, but not as much as analysts had forecast.  And on Friday, Baker Hughes reported the US oil rig count rose by 10 to 869 while the Canadian rig count dropped by 12 to 140.

Mounting trade disputes around the globe are casting a pall on the outlook for economic growth.  The trade wars are also boosting the US dollar, making crude more expensive for buyers using other currencies.

According to Reuters, currencies of major emerging economies, including China, India and Turkey have taken a hit recently.

Oil prices were underpinned, however, by looming US sanctions against Iranian crude exports which are scheduled to be imposed in November.  While a number of governments, including China India and the European Union say they oppose the sanctions, they are expected to bow to US pressure.

Should the Trump administration carry through with its threat to re-impose crippling sanctions, Iranian crude exports could fall between 500,000 and 1.3 million barrels per day (b/d).  The supply reduction depends on whether buyers of Iranian crude will be granted waivers by the US to allow for some imports.

The International Energy Agency warns that the lull in oil price increases could be short-lived due to the Iran sanctions.

“The recent cooling down of the market, with short-term supply tensions easing, currently lower prices, and lower demand growth might not last,” the IEA said in a monthly report.

“As oil sanctions against Iran take effect, perhaps in combination with production problems elsewhere, maintaining global supply might be very challenging.”

The US-China trade war continues to concern investors after China announced earlier in the week that it would impose additional tariffs of 25 per cent on $16 billion worth of US goods.

Crude oil was threatened to be put on the list of items included in the tariffs, however, Beijing backed down from the threat but has slapped tariffs on propane and other refined fuels.

Some analysts believe Chinese imports of US oil will fall significantly as a result of the trade war.