OPEC chief says Iran still ‘very important as United States sanctions loom

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The US has also asked Russian Federation and Saudi Arabia to make up for the difference, something which has allowed those to countries to take up "hostage taking policies in the market", according to Iran's OPEC governor Hossein Kazempour Ardebili, the AP report added.

Benchmark Brent crude already is nearing $80 a barrel and analysts believe it may go even higher as production remains low.

“Investors are now assessing the Saudis' mixed message on oil prices versus its earlier pledge to increase output, ” said Hong Sungki, a commodities trader at NH Investment & Securities Co.in Seoul.

Unilateral U.S. sanctions on oil sales by Iran, OPEC's third-biggest supplier, take effect on November 4.

USA crude futures CLc1 settled up $1.27, or 1.8 percent, at $71.12 a barrel. Reuters reported on September 5 that Saudi Arabia wants oil to stay between $70 and $80 a barrel to keep a balance between maximising revenue and keeping a lid on prices until USA congressional elections.

The countries are the world's two largest economies.

"As oil sanctions against Iran take effect, perhaps in combination with production problems elsewhere, maintaining global supply might be very challenging and would come at the expense of maintaining an adequate spare capacity cushion", IEA said in its monthly Oil Market Report. OPEC revenues will decline to US$719 billion in 2019, according to EIA projections, driven mainly by lower crude oil prices, as well as slightly lower OPEC production and exports.

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The producer group said in June that it would agree to some supply increases starting in July, though the specific targets were not announced at the time.

The U.S. Energy Information Administration said on Monday that the country's oil output from its seven major hale formations is expected to rise by 79,000 per day to 7.6 million bpd next month.

Bloomberg reported on Tuesday, citing unnamed Saudi sources, that the kingdom was now comfortable with prices above $80 per barrel, at least for the short term.

The supply concerns outweighed an increase in oil inventories in the United States reported late on Tuesday.

Meanwhile, American Petroleum Institute data showed that crude stockpiles increased last week, while those in the storage hub at Cushing in Oklahoma fell.

The prospect of Russian Federation and the US working together to achieve global supply and demand objectives is intriguing given the long-standing rivalry between the USA and OPEC; but it makes sense when one considers that both the USA and Russian Federation have a strong mutual ally in energy matters, namely, Saudi Arabia.

"Overnight chatter suggests that the Saudis are more than happy with a Brent price above $80 or that OPEC, more generally, is not considering raising output".

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