Crude oil futures extend gains on supply concerns, Iran sanctions

Venezuela's production is plummeting and output is 550,000 bpd below it's agreed upon target as part of the OPEC deal

OIL: Benchmark U.S. crude oil rose 70 cents to $72.20 per barrel in electronic trading on the New York Mercantile Exchange.

At $80 per barrel, Asia's thirst for oil costs the region a whopping $1 trillion a year, more than twice what it was in 2015/2016, the two years prior to the OPEC-cuts which started in 2017.

Brent crude futures LCOc1 reached an intraday high of $80.33 a barrel before receding to $80.16 by 11:09 a.m. EDT [1509 GMT].

Geopolitical concerns, tightening product inventories and robust demand would continue to provide support for prices, experts noted.

France's Total warned on Wednesday that it might abandon a multibillion dollar gas project in Iran if it could not secure a waiver from United States sanctions, casting further doubt on European-led efforts to salvage the nuclear deal.

French President Emmanuel Macron says Europe will try to protect its companies doing business with Iran from USA sanctions but indicated business giants like Total would make independent choices.

A worker walks at the Zubair oilfield in Basra, Iraq May 9, 2018.

"When we backed out of the Iran Nuclear Deal that took about 500 to 800 barrels a day, roughly, off the market initially, and so that created about a $5 lift on the Brent Oil Crude Prices, about $2 to $3 lift on USA prices in the last five days on that", said Eugene Graner, Heartland Investment Services President.

World oil prices have surged by more than 70 percent over the a year ago as demand has risen sharply but production has been restricted by the Organization of the Petroleum Exporting Countries, led by Saudi Arabia, and other producers including Russian Federation.

As the analysts expect that the majority of shippers will prefer the latter option, the consumption of middle distillate fuel, such as diesel and marine gasoil will increase, thereby pushing the demand for oil higher, dragging crude prices up.

OPEC kingpin Saudi Arabia said on Thursday it would make sure the world is adequately supplied with oil just as major consumer India expressed frustration with rising prices. They plan to meet their Russian counterpart in Saint Petersburg in a week to discuss the oil market.

India's Oil Minister Dharmendra Pradhan said on Twitter that Saudi energy minister Khalid al Falih had assured him Riyadh and other producers would "ensure availability of adequate supplies to offset any potential shortfalls and ensure that prices remain reasonable".

The IEA said global oil demand would average 99.2 million bpd in 2018, although USA bank Goldman Sachs said consumption would cross 100 million bpd "this summer".

TOTAL: French oil and gas producer Total said it would not be able to continue a multi-billion dollar project in Iran unless it is granted a waiver by US authorities.

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