Oil rig
Meanwhile, US crude oil production levels notched a record high of 12.3 million bpd putting pressure on oil prices. Image Credit: Pixabay

Abu Dhabi: Oil prices are expected to trade positive in the near term on the back of Opec production cuts as well as supply disruptions in Iran and Venezuela, analysts said. However, rise in US oil production will continue to weigh on oil prices.

The Organisation of the Petroleum Exporting Countries (Opec) and its allies, including Russia, are currently cutting production by about 1.2 million barrels to boost oil prices, whereas oil production is affected in Venezuela and Iran due to sanctions by the US administration.

“With Opec members suggesting for a continuation in supply cuts for 2H (second half) 2019, oil prices look poised to trade positive as traders contemplate growing supply tightness,” said Benjamin Lu, commodity analyst from Singapore based Phillip Futures.

“We urge caution for the longer term, however, as geopolitical uncertainties cloud market outlook for oil prices in second half of 2019.”

Saudi Arabia’s oil minister Khalid Al Falih in an interview to Russia’s Sputnik news agency last week indicated that a global deal on limiting oil production could be extended till the end of 2019 despite loss of Iranian crude due to US sanctions.

“We are not seeing a shortage in the market. I think we will focus on inventories and try to bring it down in terms of what we look at the global production and we try to adjust by having this Opec+ agreement from July to end of the year possibly,” Al Falih said replying to a question on the impact of Iran situation on world oil markets.

Brent, the global benchmark was up by 0.14 per cent to trade at $70.85 per barrel when markets closed on Friday. US crude West Texas Intermediate was up by 0.21 per cent at $61.94 per barrel.

Last month, the US administration decided to end Iran sanction waivers granted to eight countries that import oil from the Islamic Republic in order to choke off Tehran’s main source of revenue. The move follows reimposition of restrictions on the country late last year for its nuclear related activities.

“US waivers granted to eight buyers of Iranian crude oil last November expired this week, but the market had concluded that Washington would struggle to bring down Iranian exports to zero,” Ole Hansen, head of commodity strategy at Saxo Bank said.

Meanwhile, US crude oil production levels notched a record high of 12.3 million bpd putting pressure on oil prices.