Oil prices rose more than 1 percent on Friday, with Brent climbing to a four-year high, as USA sanctions on Tehran squeezed Iranian crude exports, tightening supply even as other key exporters increased production. WTI has risen around 18% since mid-August.
Brent crude oil futures LCOc1 were trading at $83.04 per barrel at 0057 GMT, up 31 cents, or 0.4 percent, from their last close and near the $83.07 level reached during the last session - the highest since November 2014. That's the highest level since November 2014.
Brent has climbed about 20 percent from its most recent lows in August.
Citigroup Inc. has a warning for US oil investors: American crude prices may tumble to the steepest discount against global benchmark Brent since 2013.
In this instance, prices will continue rising until there is clear evidence of a slowdown in oil consumption growth, or an adjustment in production and sanctions policy from Saudi Arabia, Russia or the White House.
Those include "increasing supply concerns resulting from impending US sanctions on Iran", as well rising concerns over the Organization of the Petroleum Exporting Countries' and Russia's willingness to increase production to make up for any Iranian shortfall, and continued strong demand for oil, he said.
Oil extended gains after the longest quarterly rally in a decade as a slowdown in American drilling added to supply risks while the US and Saudi Arabia discussed market stability.
"U.S. (fiscal) tightening, higher oil prices and ongoing trade frictions are all taking their taking their toll on the growth outlook", HSBC said. The global benchmark traded at a $9.81 premium to WTI.
He underlined that China, Japan and European countries will be the main losers of US' political tensions in the market, as these countries are the major oil importers.
Brent and WTI have roughly tripled compared with lows seen in January 2016, when the Organization of the Petroleum Exporting Countries and allies led by Russian Federation started to curb oil supplies to rebalance an oversupplied market.
"Nobody wants to get caught short, full in the knowledge that more Iranian barrels are poised to be removed from the market, " Stephen Brennock, oil analyst at PVM Oil Associates, said in a research note published on Monday, as quoted by CNBC.
Oil edged higher on Thursday, driven by the prospect of a shortfall in global supply once USA sanctions against major crude exporter Iran come into force in five weeks.
Higher oil prices and a strong USA dollar could hit demand growth next year, analysts said.