LONDON • Oil rose towards US$80 a barrel yesterday, supported by concern that falling Venezuelan crude output and a potential drop in Iranian exports could further tighten global supply.
Crude is trading at the highest since late 2014, underpinned by a supply-cutting deal among the Organisation of the Petroleum Exporting Countries (Opec) plus Russia and other non-members, and strong global demand.
Brent crude, the global benchmark, rose 63 US cents to US$79.85 a barrel. Last week, it topped US$80 for the first time since November 2014.
US crude was up 42 US cents at US$72.66, having earlier traded at US$72.72, its highest since November 2014.
"The solid global economy, selected supply disruptions and the upbeat market mood in particular in oil frame a positive environment," said Mr Norbert Ruecker, head of commodities and macro research at Julius Baer.
The US government imposed new sanctions on Venezuela following Sunday's re-election of President Nicolas Maduro, a move that analysts say could further curb the country's oil output, which is already at its lowest in decades.
"We can expect continued falling Venezuelan production," said Mr Tony Nunan, an oil risk manager at Mitsubishi Corp in Tokyo.
Concern about a potential drop in Iranian oil exports following Washington's exit from a nuclear deal with Teheran and the threat of US sanctions is also supporting prices. On Monday, the United States hardened its approach to Iran.
Venezuela and Iran are members of Opec, which with its allies has curbed production since January last year to get rid of a supply glut that in mid-2014 led to a price collapse.
Due in part to the involuntary drop in Venezuela's output, Opec is over-delivering on the agreement.
Saudi Arabia and other major Opec producers could in theory add more supply, but have yet to do so.
The Opec-led supply curbs have largely cleared an inventory surplus in industrialised countries based on the deal's original goals, and stocks continue to decline.
US crude stockpiles are forecast to have declined by 2.8 million barrels last week, a third straight weekly fall.
Limiting the upward pressure on prices is growing supply in the US, where shale production is forecast to hit a record high next month.