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Oil steady near multi-year highs as U.S. drilling rises

Reuters  |  LONDON 

By Christopher Johnson

LONDON (Reuters) - steadied below 3-1/2 year highs on Monday as resistance emerged in and to U.S. sanctions against major crude exporter Iran, while rising U.S. drilling pointed to higher North American production.

Brent crude was up 20 cents at $77.32 a barrel by 1315 GMT and U.S. light crude rose 10 cents to $70.80.

Both hit their highest since November 2014 last week at $78 and $71.89 a barrel respectively as markets anticipated a sharp fall in Iranian crude supply once U.S. sanctions bite later this year.

It is unclear how hard U.S. sanctions will hit Iran's A lot will depend on how other major respond to Washington's action against Tehran, which will take effect in November.

China, France, Russia, Britain, and all remain in the nuclear accord that placed controls on Iran's nuclear programme and led to a relaxation of economic sanctions against and companies doing business there.

Some have said they expect Iranian crude exports to fall by as little as 200,000 barrels per day (bpd), while others put the figure closer to 1 million bpd.

Michael Wittner, at Societe Generale, forecasts U.S. sanctions will remove 400,000-500,000 bpd of Iranian crude from the global

"In 2012 the reduction in Iranian crude production and exports was around 1 million bpd," Wittner said. "This time around, we expect much less of an impact."

Greg McKenna, at AxiTrader, says it is still "far from certain" that sanctions "will bite in the way intended".

"has said it will protect its companies from U.S. sanctions, has said French Total has yet to pull out of its fields and all the while it seems the Chinese are ready to fill the void created by the U.S."

The surge in comes at a time of tight supply amid record Asian demand and voluntary output restraint by the Organization of the Petroleum Exporting Countries and non-OPEC producers including

On Monday, however, markets were held in check by of a rise in U.S. drilling for new

U.S. drillers added 10 in the week to May 11, bringing the total to 844, the highest level since March 2015, firm said on Friday.

"Soaring U.S. shale output will continue to put a cap on prices," said Hussein Sayed, at

(Additional reporting by in Singapore; Editing by David Goodman)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Mon, May 14 2018. 18:54 IST
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