By Jessica Resnick-Ault
NEW YORK (Reuters) - Oil prices surged 2 percent on Friday and were on track to end a run of weekly declines on signs that Iran sanctions may limit global supply and that a trade war may not curb China's appetite for U.S. crude.
Brent crude oil rose $1.39 a barrel to $76.13 by 12:06 p.m. EDT [1606 GMT] after earlier touching a high of $76.42. U.S. crude was $1.23 higher at $69.06.
U.S. crude was set to be up more than 4.8 percent on the week, after seven consecutive declines, and Brent was on track for a 5.9 percent rise after three weeks of falling prices.
"Both crude markers are on track to end a steady run of weekly declines. This is largely due to a tightening fundamental outlook on the back of looming Iranian supply shortages," said Stephen Brennock, analyst at London brokerage PVM Oil Associates.
Concerns that an escalating trade war between China and the U.S. could slow economic growth and weigh on crude purchases eased slightly after sources told Reuters that China's Unipec will resume purchases of U.S. crude oil in October, after a two-month halt due to the fight.
At the same time, concerns about global crude supply intensified with signs that U.S. sanctions on Iran are curbing shipments.
The U.S. government reimposed sanctions on Iran this month after withdrawing from a 2015 international nuclear deal, which Washington saw as inadequate for curbing Tehran's activities in the Middle East and denying it the means to make an atomic bomb. Tehran says it has no ambitions to make such a weapon.
Iran is the third-biggest producer in the Organization of the Petroleum Exporting Countries, supplying around 2.5 million barrels per day (bpd) of crude and condensate to markets this year, equivalent to about 2.5 percent of global consumption.
"Third-party reports indicate that Iranian tanker loadings are already down by around 700,000 bpd in the first half of August relative to July, which if it holds will exceed most expectations," U.S. investment bank Jefferies said on Friday.
"We expect that by Q4 the market will be dealing with either undersupply, dwindling spare capacity - or both," it added.
Energy consultancy FGE says it expects Iran's crude and condensate exports to drop below 1 million bpd by mid-2019.
The dollar index served as a tailwind, said Bob Yawger, director of futures at Mizuho in New York. A key index of the dollar versus a basket of other currencies fell on Friday, boosting the price of oil and other dollar denominated commodities.
The dollar fell after Federal Reserve Chair Jerome Powell said on Friday that steady rate hikes are the best way to protect the U.S. economic recovery.
Traders kept an eye on the North Sea, where workers on three oil and gas platforms plan to strike next month. Oil production will stop during the strikes. The three fields contribute about 45,000 to 50,000 bpd to the North Sea's Forties and Brent crude streams.
The market also awaited weekly data on the U.S. rig count, an indicator of future production, at about 1 p.m. EDT.
(Reporting by Christopher Johnson in LONDON and Henning Gloystein in SINGAPORE; Editing by Kirsten Donovan and Phil Berlowitz)
This story has not been edited by Firstpost staff and is generated by auto-feed.
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Updated Date: Aug 25, 2018 00:06:45 IST