Oil Prices Up on Iran Sanctions While Future Contracts Decline

Benchmark Brent crude oil settled 74 cents higher at $72.96 a barrel on Friday. US light crude was 82 cents higher at $67.63 a barrel, CNBC reported.

A selloff on Wednesday left both benchmarks down for the week overall, with Brent off 0.5% and US crude 1.2% lower.

Hedge funds and other money managers cut their bullish positions on US crude in the week ending Aug. 7 to the lowest level since June, data showed on Friday. Tariq Zahir, managing member at Tyche Capital in New York, said prices are expected to remain under pressure as US gasoline demand slows going into the autumn and refiners shut for maintenance, pushing more crude into storage, Financial Tribune reported.

“I think it now comes down to the point of what we see in demand numbers,” he said.

US crude supplies fell less than expected in the latest week and data released on Friday showed US energy companies this week added the most oil rigs since May.

Escalating trade disputes between the US, China and other countries have dimmed the outlook for economic growth and boosted the US dollar, making oil more expensive for consumers using other currencies.

Currencies of major emerging economies, including China, India and Turkey, have slumped.

Despite these worries, prices got a boost from US sanctions against Iran, which from November will affect oil exports from that country.

Although the European Union, China and India oppose the US sanctions against Iran, many are expected to bow to US pressure.

Analysts expect Iranian crude exports to fall by between 500,000 and 1.3 million barrels per day, with buyers in Japan, South Korea and India already dialing back orders.

The reduction will depend on whether buyers of Iranian oil receive waivers that would allow some imports.