Oil prices dipped on Friday on expectations that producer club OPEC will soon raise output to make up for a decline in exports from Iran following a hardening of sanctions on Tehran by the United States.
Still, prices are on course for the longest run of weekly gains in years, as oil markets have tightened amid supply disruptions and rising geopolitical concerns, especially over the tensions between the United States and Iran.
Brent crude futures were at US$74.18 per barrel, down 17 cents, or 0.2 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at US$64.89 per barrel, down 32 cents, or 0.5 percent.
The dip followed Brent’s rise above US$75 per barrel for the first time this year on Thursday after Germany, Poland and Slovakia suspended imports of Russian oil via a major pipeline, citing poor quality. The move cut parts of Europe off from a major supply route.
WTI is on track for its eighth successive weekly gain, the longest weekly run since the first half of 2015. Brent is set a fifth weekly price gain, the longest stretch since April 2018.
Oil has been driven up by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and U.S. sanctions on Venezuela and Iran. Crude futures are up around 40 percent so far this year.
“Given the concerns around supply tightening from Libya, Venezuela, and Iran, the short-term view on Brent is bullish,” Fitch Solutions said.
According to Washington, it would end all exemptions for sanctions against Iran, demanding countries halt oil imports from Tehran from May or face punitive action.
To make up for the shortfall from Iran, the United States is pressuring OPEC’s de-facto leader Saudi Arabia, as well as allied producers like Iraq and the United Arab Emirates, to end voluntary supply restraints.
“The end of the U.S. waivers on Iran exports will be offset by higher core-OPEC and Russia and as a result we do not expect further price upside, even if volatility is likely to increase in coming months,” U.S. bank Goldman Sachs said.