Crude set for weekly gain as Iran sanctions bite into supply

NEW YORK (Bloomberg) -- Crude is poised for a third weekly advance out of four as Iranian sanctions take center stage, with investors eyeing the impact on supply.

Futures in New York slid on Friday amid a stronger dollar, but are still on track for a 0.5% advance this week amid signs that looming U.S. sanctions on Iran are whittling global supply levels. The International Energy Agency warned of higher oil prices amid deepening supply losses in Iran and Venezuela.

“There is a lot of concern about what winter is going to bring in terms of tight supplies when the Iran sanctions really kick in full blast,” said John Kilduff, a partner at New York-based hedge fund Again Capital LLC. Oil is dropping Friday as “this dollar strength is back in focus and we are going to get more of it.”

Oil in New York has topped $71/bbl this month and Brent hit $80 as Iranian sanctions threaten to further cut into available supply, overshadowing concerns over U.S.-China trade tensions. Oil is more likely to rise than fall in part due to strong geopolitical constraints, according to Arc Energy Research Institute.

“Iranian exports are falling very, very quickly,” Amrita Sen, chief oil analyst at Energy Aspects Ltd., said in a Bloomberg television interview. “There’s a lot of focus right now on Iran but also on emerging-market demand. The trade war is something we are watching very, very closely.”

West Texas Intermediate futures for October delivery slid 48 cents to to $68.11/bbl at 10:12 a.m. on the New York Mercantile Exchange. Total volume traded was about 20% below the 100-day average.

Brent for November settlement slipped 47 cents to $77.71/bbl on the ICE Futures Europe exchange. The contract is up 1.1% this week. The global benchmark traded at a $9.73 premium to WTI for the same month on Friday. The Bloomberg Dollar Spot Index rose as much as 0.2% on Friday.