However, markets remained below the highs of the previous day, as surging output from the United States is likely to offset at least some of the shortfall in supply.
Brent crude futures LCOc1 were at $79.55 per barrel at 06:51 GMT, up 25 cents, or 0.3%. Yesterday Brent broke through $80 for the first time since November 2014
US West Texas Intermediate (WTI) crude futures were at $71.65 a barrel, up 16 cents, or 0.2%, from their previous settlement.
Crude prices have received broad support from voluntary supply cuts led by OPEC and aimed at tightening the market. “Global inventories are approaching long-run averages, suggesting that the coordinated OPEC/non-OPEC supply cuts have been successful,” said Jack Allardyce, oil and gas research analyst at Cantor Fitzgerald.
Beyond OPEC’s cuts, strong demand as well as falling output from Venezuela and a US announcement earlier this month to renew sanctions against OPEC-member Iran has helped push up Brent by 20% since the start of the year. US investment bank, Jefferies, said sanctions against Iran could remove more than one million barrels per day (bpd) from the market.
Britain’s Barclays bank said on Friday that it expected average prices of $70 per barrel Brent for this year and of $65 a barrel for 2019, up from estimates of $63 and $60 per barrel previously. With crude prices at levels not seen since late 2014, Allardyce warned the high fuel costs could start limiting consumption. At $80 per barrel, Asia’s thirst for oil costs the region a huge $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. “Higher oil prices due to tighter physical markets and geopolitical tensions could weigh significantly on the macro outlook for emerging Asian market countries,” Barclays said.