Oil up on supply concerns before OPEC and other producers meet

Oil prices rose on Friday ahead of a meeting of OPEC and other large crude exporters that will focus on production increases as U.S. sanctions restrict Iranian exports. OPEC and its allies are scheduled to gather in Algeria on Sunday to discuss how to allocate higher supply to offset the shortage of Iranian supplies. Brent crude oil LCOc1 was up 75 cents at $79.45 a barrel by 0955 GMT. U.S. light crude CLc1 was up 45 cents at $70.77.

Brent is close to four-year highs, trading just below $80 a barrel, as investors bet that the Organization of the Petroleum Exporting Countries will be unable to compensate fully for the loss of oil from Iran, OPEC’s third-biggest producer. But the meeting on Sunday is unlikely to be able to change production policy. Such a move would require OPEC to hold what it calls an “extraordinary meeting”, which is not on the agenda. U.S. President Donald Trump increased pressure on OPEC on Thursday, calling on the organization to “get prices down now!”

Trump’s criticism was directed primarily at Saudi Arabia, OPEC’s biggest producer, after the kingdom said it could tolerate oil prices above $80, at least in the short term, said Commerzbank commodities analyst Carsten Fritsch. “Saudi Arabia now faces a dilemma,” Fritsch said. “Refusing to step up production would mean going against the will of ally Trump, but giving in to Trump’s demand would make it his accomplice, which could see OPEC tested to the limit.” “Iranian crude exports are coming (down) earlier and bigger than expected, at a time seasonal demand is strong. With spare capacity also falling sharply, the market remains exposed to supply-induced price shocks,” ANZ Bank analysts said in a note to clients.