Mubasher: Oil prices rose on Monday on expectations that US sanctions against Iran’s crude exports would result in tight market supplies once coming in place next month.

By 7:45 am GMT, US Nymex crude futures jumped 0.62% to $69.55 per barrel (pb), while global benchmark Brent futures jumped rose 0.59% to $80.25 pb.

While US sanctions against Iran’s hydrocarbon sector are set to take effect on 4 November, Washington is pushing to cutting the oil-rich nation’s crude exports to zero in a bid to force Tehran to re-negotiate the terms of the 2015 accord on its nuclear activities.

It would be more difficult for countries to receive sanction waivers than it was during the Obama administration, US Treasury Secretary Steven Mnuchin told Thomson Reuters on Sunday.

This came also as members of the Organization of Petroleum Exporting Countries (OPEC) agreed to ramp up production last June in an effort to offset the expected shortfall of Iranian shipments.

However, the producer group is struggling to raise supplies, as Saudi output hike was offset by disruptions elsewhere, according to an internal document reviewed by the news agency.

Other producers are struggling to fully compensate the expected shortfall from Iran, which would push prices higher.

Some soothing indicator may come from the US, as drillers added four rigs in the week ended 19 October, to a total of 873, the highest level seen since March 2015, according to Baker Hughes energy service company.

With drilling activities rising after months of stagnation, US production is expected to rise.

In the same vein, the Intercontinental Exchange said that its new Permian West Texas Intermediate (WTI) crude futures contract deliverable in Houston, Texas would start trading on Monday.

Moreover, the ongoing trade conflict between the US and China is set to weigh on demand.

“The full impact of the US-China trade war will hit markets in 2019 and could act as a considerable drag on oil demand next year, raising the possibility of the market returning to surplus,” Emirates NBD bank said.

Chinese manufacturing activity started to lose momentum, as US President Donald Trump proposed levying duties on additional Chinese imports from 1 January, both of which would drag on trade, shipping brokerage Eastport told Reuters.