Abu Dhabi: Analysts see Brent crude oil making its way back up towards $80 (Dh293.8) per barrel as US sanctions on Iran come into effect from next month.

US reimposed sanctions on Iran, the third biggest oil producer within Opec group, earlier this year and asked all importing countries to stop buying oil from them.

The issue raised concern about supply shortages in the market and pushed oil prices higher with Brent trading at a four-year high of $85 per barrel earlier this month. But oil prices fell last week after Saudi Arabia reassured oil markets that it would meet any demand that materializes due to disruption in supplies following US sanctions on Iran.

“With $75 per barrel now acting as support, we see Brent crude oil making its way back up towards $80 per barrel in preparation for US sanctions taking their full toll on supply,” Ole Hansen, head of commodity strategy at Saxo Bank, said.

Brent was trading at $77.62 per barrel, up by 0.95 per cent when markets closed on Friday. West Texas Intermediate was at $67.59, up by 0.39 per cent.

Speaking at an event in Riyadh, Saudi Arabia’s energy minister Khalid Al Falih said they will be closely monitoring markets in the next two to three months and will add more oil to the market to meet any demand that comes up.

“We will decide if there are any disruptions from supplies and especially with Iran sanctions looming, we will continue with the mindset we have now, that is to meet any demand that materialises and ensure that customers are satisfied,” he said.

Al Falih also said that they lifted the ceiling on output restrictions and asked countries to increase production to stabilise oil markets.

“In June we lifted the ceiling on countries and said ‘produce as much as you can’. Our strategy worked two years ago when we pulled production to bring stability back and it worked in the last few months by easing production and removing anxieties about looming shortages,” he added.

Hansen feels that Saudi Arabia’s latest strategy of ‘produce as much as you can’ will hurt spare capacity and leave the market exposed in the event of disruption in supplies.

“In such a circumstance the market will begin to worry that lower spare capacity would leave the market exposed in the event of production outages from other producers such as Iraq, Venezuela, Libya and Nigeria,” he added.