Oil edges higher as Iran sanctions outweigh trade concerns

Oil rose on Tuesday, buoyed by the prospect of price support from US sanctions on Iran, although with concern brewing about the outlook for demand, particularly in light of the trade dispute between Washington and Beijing, gains were limited, according to Reuters.

Brent crude futures LCOc1 were last up 49 cents on the day at $72.70 a barrel by 1230 GMT, while the most active October US crude futures contract CLv1 rose 43 cents from its last close to $65.85 a barrel.

“Prices are being supported by the prospect of lower oil supply from Iran,” Commerzbank said in a note.

The full impact of the Iran sanctions is not yet clear.

While most of Europe’s energy firms are likely to fall in line with Washington, China has indicated that it will continue to buy Iranian oil.

The Iranian supply cut may also be more than compensated for by production increases outside the Organisation of the Petroleum Exporting Countries.

BNP Paribas said it expected oil production from OPEC, of which Iran is a member, to fall from an average of 32.1 million barrels per day (bpd) in 2018 to 31.7 million bpd in 2019.

Still, traders said overall market sentiment was cautious given the US-China dispute that threatens to undermine global growth and, therefore, consumption of industrial commodities.