* U.S. presses allies to cut Iran imports to zero by November
* Saudi Aramco is said to boost production to about 10.8m b/d
By Jessica Summers
Crude rose to the highest in a month as U.S. pressure on allies to stop importing from Iran overshadowed a looming surge in Saudi Arabia’s production.
Futures rose 3.6 percent in New York amid growing supply concerns. The U.S. pushed allies to cut Iran oil imports to zero by November, a militia leader in Libya handed over control of some of the country’s biggest crude-exporting terminals and an oil-sands upgrader in Canada may be shut for a month. Earlier in the session, prices retreated briefly after Saudi Arabia was said to plan to pump a record amount of crude in July.
“Even if Saudi Arabia is ramping up, there’s enough concern in the market about production shutdowns, whether it’s Canada, Libya, to hold these prices up,” said Rob Haworth, who helps oversee $151 billion at U.S. Bank Wealth Management in Seattle. “It’s a market that still has a bullish bias to it.”
In Libya, forces loyal to Khalifa Haftar, a commander in the politically divided nation’s eastern region, turned over ports with a combined export capacity of 800,000 barrels a day to the National Oil Corp. in Benghazi, a city in the east.
Some of the Libyan ports are going to be “administered by the wrong person at this point,” said Bob Yawger, director of futures at Mizuho Securities USA Inc. in New York. “That could be a problem. It looks like those barrels won’t have the blessing of the UN.”
West Texas Intermediate crude for August delivery advanced $2.45 to settle at $70.53 a barrel on the New York Mercantile Exchange. Total volume traded was about 20 percent above the 100-day average.
Brent futures for August settlement rose $1.58 to end the session at $76.31 a barrel on the London-based ICE Futures Europe exchange. Brent traded at a $5.78 premium to WTI.
State oil company Saudi Aramco is aiming to boost production next month to about 10.8 million barrels a day, according to people briefed on the country’s output policy, who asked not to be named discussing confidential information. That would surpass the previous high of 10.72 million barrels a day in November 2016.
“They always increase crude production at this time of year because they burn crude directly to utilities” to meet summer air conditioning demand, saidThomas Finlon, director of Energy Analytics Group LLC in Wellington, Florida. “Pending that, 800,000 barrels a day, even with the increase in cooling needs, feels like a pretty substantial increase.”
Meanwhile, U.S., crude stockpiles probably fell 3 million barrels last week, according to a Bloomberg survey ahead of the release of Energy Information Administration data on Wednesday. Inventories at the biggest U.S. storage complex in Cushing, Oklahoma, decreased 1.3 million barrels last week, according to a forecast compiled by Bloomberg.
The industry-funded American Petroleum Institute will release its weekly tally of inventories later on Tuesday.
* Gasoline futures rose 1.1 percent to settle at $2.0746 a gallon.
* In Canada, a key piece of equipment at the Syncrude oil-sands complex in Alberta halted operations last week after a transformer blast shut the entire 350,000 barrel-a-day facility. Syncrude is assessing the disruption and conducting a “return to service plan,” plant controller Suncor Energy Inc. said.
* Steel tariffs and a reduction in free trade are a major risk to oil and gas demand and economic growth, the chief executive officers of Exxon Mobil Corp. and Chevron Corp. said at the World Gas Conference in Washington D.C. Tuesday.
–With assistance from Heesu Lee and Alex Longley.
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