India reducing oil from Iran ahead of U.S. sanctions

The IEA said in a monthly report that oil prices could break out above $80 a barrel unless other producers act to offset deepening supply losses in Iran and Venezuela.

Traders said an early rally on Friday was sparked by reports U.S. Secretary of State Michael Pompeo was going to announce new sanctions on Iran.

"Russia and Saudi Arabia claim they seek to balance the global oil market, but they are trying to take over a part of Iran's share", Iran's governor of the Organization of the Petroleum Exporting Countries, Hossein Kazempour Ardebili, was quoted as saying by Tasnim news agency.

Prices are holding at a lower level under pressure from high U.S. East Coast gasoline stockpiles and a sense that there will be considerable demand destruction from Hurricane Florence, which made landfall on Friday, said John Kilduff, a partner at Again Capital in NY. Further sanctions on oil and transactions with the central bank of Iran will come into effect on November 4.

If those estimates are right, it would mark the first time since 1973 that the US has led the world in output, according to government figures.

The agency expects the USA will continue to top Russian Federation and Saudi Arabia for the rest of this year and through 2019.

Following crippling sanctions on Iran following the collapse of the Washington and Tehran's nuclear deal, the price of a barrel of United States crude oil could result in a price rise of $4 (£3.12) a gallon of unleaded fuel at petrol station pumps.

"While oil prices are higher this week, volatility will stay despite the obvious supply drop among some OPEC members such as Iran, as the trade conflict between the world's two biggest economies is still in play", Kim Kwangrae, a commodities analyst at Samsung Futures Inc., said by phone from Seoul.

Washington reimposed some of the financial sanctions from August 6, while those affecting Iran's petroleum sector will come into force from November 4.

"The Iran story is the dominant factor for prices".

Exports so far this month slumped to around 1.3 million barrels a day (bpd) after they were as high as 3 million bpd back in 2016.

Novak said that "today, the situation is quite fragile, of course, and it is related to the fact that not all the countries have managed to restore their market and production".

Despite an increase in OPEC production since then, Saudi Arabia has added less crude than it initially announced. Saudi Arabia's oil production could rise to the level of 11 million barrels per day if the demand sustains.