* America’s working oil rigs rise by five to 863: Baker Hughes
* WTI crude futures trade little changed at $73.64 a barrel

By Grant Smith and Tsuyoshi Inajima

(Bloomberg) —

Oil steadied in New York as traders weighed the threat to Iranian supplies from U.S. sanctions against signs of increased drilling by American producers.

West Texas Intermediate futures were little changed. Japan will halt purchases of Iranian crude after September unless it receives a waiver from the U.S., according to people with knowledge of the matter. President Donald Trump’s administration is trying to choke off Iranian sales after quitting a nuclear agreement with the OPEC member. Meanwhile, American drillers added working oil rigs for the first time in three weeks, according to data from Baker Hughes.

Oil rallied to a three-year high last week as concerns over supply disruptions in Canada, Libya and Venezuela overshadowed a deal by the Organization of Petroleum Exporting Countries and its allies to boost output. Though Saudi Arabia increased production under mounting pressure from Trump over high prices, Iran warned oil could reach $100 a barrel if U.S. pressure on buyers to end imports from the Persian Gulf nation causes a supply cut.

“We have grown increasingly bearish on the prospects for Iranian crude,” said analysts at Fitch’s BMI Research. “Uncertainty surrounding the re-imposition of nuclear-related sanctions remains extremely high.”

WTI crude for August delivery slipped as much as 34 cents on the New York Mercantile Exchange, and was down 16 cents at $73.64 a barrel at 10:25 a.m. London time. The contract has retreated since touching a three-year high of $75.27 on July 3. Total volume traded Monday was about 10 percent below the100-day average.

Brent for September settlement climbed 62 cents to $77.73 a barrel on the London-based ICE Futures Europe exchange, after falling 28 cents on Friday. The global benchmark traded at a $6.13 premium to WTI for the same month.

Futures for September delivery on the Shanghai International Energy Exchange rose 0.4 percent to 497.7 yuan a barrel. The contract dropped 0.4 percent on Friday.

Iran Outlook

U.S. sanctions against Iran, OPEC’s No. 3 producer, could curb the country’s oil exports by 1.3 million barrels a day by the end of 2019, BMI Research said in a note. That’s roughly half the nation’s total exports.

Even as world powers last week agreed to keep looking for ways to ensure Iran gets the financial and energy benefits it signed up for under a landmark nuclear deal, they fell short of providing tangible guarantees sought by the Islamic Republic.

U.S. working oil rigs rose by five to 863 last week, according to data from Baker Hughes. The rig count previously reached that level in June for the first time since March 2015. Crude output in the U.S. has been at a record 10.9 million barrels a day in recent weeks, according to the Energy Information Administration.

Other oil-market news:

* Hedge funds cut their bets on declining Brent crude prices for a fifth straight week, according to ICE Futures Europe data.
* The oil industry risks a supply crunch as big companies focus on U.S. shale and short-term efforts, Amin Nasser, the head of Saudi Arabia’s state producer, told the Financial Times.
* The first shot of the U.S.-China trade war went off without much of a reaction from investors. The calm may be short-lived.

To contact the reporters on this story:
Grant Smith in London at gsmith52@bloomberg.net;
Tsuyoshi Inajima in Tokyo at tinajima@bloomberg.net

To contact the editors responsible for this story:
James Herron at jherron9@bloomberg.net
Amanda Jordan, Rakteem Katakey