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Oil rises as Saudis are said to be content with prices over US$80
[LONDON] Oil rose as Saudi Arabia was said to be comfortable with Brent crude exceeding US$80 a barrel.
Futures in London added as much as 1.7 per cent. The world's biggest crude exporter is content to see the global benchmark advance, at least in the short term, as markets adjust to the impact of US sanctions on Iranian supply, according to people familiar with the kingdom's view. Iranian oil exports have already plunged to a 2 1/2-year low, tanker-tracking data show.
"The comment from Saudi Arabia basically highlights the short-term risk that oil producers may struggle to keep crude between US$70 and US$80," said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen.
Brent has climbed more than 11 per cent from the lows of August as buyers shun purchases from Iran even before US sanctions officially start in November. Still, an escalating trade dispute between America and China is clouding the outlook for demand. Investors and traders are closely watching whether Opec and its allies will increase output when they meet to discuss strategy in Algeria on Sept 23.
Brent for November settlement rose as much as US$1.32 to US$79.37 on the ICE Futures Europe exchange, and traded at US$79.05 at 1:15 pm in London. The contract fell 4 cents on Monday. The global benchmark crude traded at a US$9.51 premium to West Texas Intermediate for the same month.
WTI for October delivery gained as much as US$1.04 to US$69.95 a barrel on the New York Mercantile Exchange, following Monday's 8-cent decline. Total volume traded was about 12 per cent above the 100-day average.