Oil up over two percent on concerns over Iran, slower U.S. output growth

NEW YORK (Reuters) - Oil prices rose more than 2 percent on Tuesday as U.S. sanctions squeezed Iranian crude exports and after U.S. crude oil production in 2019 was forecast to grow at a slower rate than previously expected, prompting supply concerns.

FILE PHOTO: Oil tanker is seen at sunset anchored off the Fos-Lavera oil hub near Marseille, France, October 5, 2017. REUTERS/Jean-Paul Pelissier/File Photo

Since spring when the Trump Administration said it would impose sanctions on Iran, crude traders have priced in a risk premium reflecting the supply shortages that may occur when exports from the third-largest OPEC member are cut. As the Nov. 4 date for imposing sanctions draws nearer, the premium has increased.

Brent crude futures rose $1.69, or 2.2 percent, to settle at $79.06 a barrel. U.S. West Texas Intermediate (WTI) crude settled $1.71, or 2.5 percent, higher at $69.25 a barrel.

Prices extended gains in post-settlement trade after industry data from the American Petroleum Institute showed U.S. crude inventories slumped 8.6 million barrels last week, versus analysts’ forecasts of a 805,000-barrel decrease.

Official U.S. government data is due to be released on Wednesday.

Washington has told its allies to reduce imports of Iranian oil and several Asian buyers, including South Korea, Japan and India appear to be falling in line.

But the U.S. government does not want to push up oil prices, which could depress economic activity or even trigger a slowdown in global gro....

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