By Stephanie Kelly
NEW YORK (Reuters) – Oil futures rose more than 1 percent on Tuesday that the OPEC would not be willing to increase production to meet shrinking deliveries from Iran, and because Saudi Arabia has an informal goal in the neighborhood of the current levels.
The raw futures of Brent rose by 89 cents or 1.1 percent to $ 78.94 a barrel at 12:58 PM. EDT (1658 GMT).
US West Texas Intermediate (WTI) raw futures rose by 88 cents or 1.3 percent to $ 69.79 per barrel.
Ministers from the Organization of the Oil-exporting Countries and non-OPEC producers meet on Sunday to discuss compliance with the output policy. The OPEC sources told Reuters that no immediate action was planned and that producers would discuss how they could share a previously agreed increase in output.
Bloomberg reported on Tuesday, citing unnamed Saudi sources, that the kingdom was comfortable at the moment with prices of more than $ 80 a barrel, at least for the short term.
Bloomberg reported that although Saudi Arabia had no desire to push prices higher than $ 80, it might no longer be possible to prevent this. US sanctions affecting the Iranian petroleum sector should take effect from November 4.
Reuters has previously reported that Saudi Arabia wants oil to stay between $ 70 and $ 80 a barrel, because the world's largest crude exporter finds a balance between maximizing sales and keeping a fall in prices until the US Congress elections .
The Russian Minister for Energy, Alexander Novak, said that an oil price between $ 70 and $ 80 was temporary and based on sanctions, adding that the long-term price would be about $ 50 per barrel.
US Secretary of Energy, Rick Perry, said last week in Moscow that he did not foresee price spikes as soon as sanctions came into force, and was positive about Saudi production.
"It will not be easy for Saudi Arabia and Russia to keep the declining production from Iran and Venezuela in balance," said Abhishek Kumar, senior energy analyst at Interfax Energy in London.
Oil future also drew support from geopolitical risks on Tuesday.
The Russian Defense Ministry said that a Russian military aircraft had been knocked down by Syrian anti-aircraft systems, but accused Israel of indirectly causing the incident by saying that Israeli jets in the neighborhood had put the Russian plane on the path of danger.
Russia has told Israel that it will take all necessary measures to protect its military personnel in Syria, the Foreign Office in Moscow said.
Market participants waited Tuesday for industry data from the American Petroleum Institute that is expected to show last week's rough US stocks for a fifth consecutive week. The data is expected at 16.30. EDT (2030 GMT) while the government's weekly report should appear on Wednesday.
FAIR WARS PROFITS
The prospects for the longer term, however, remain under pressure due to an escalation in the China-US. trade war that has blurred the outlook for rough demand.
China, one of the world's largest oil consumers, added Tuesday $ 60 billion of American products to its list of import tariffs. The move was a retaliation for President Donald Trump's planned charges on $ 200 billion of Chinese goods.
On Monday, the US government announced that on September 24th it will start charging new tariffs of 10 percent on about $ 200 billion of Chinese products, with rates up to 25 percent until the end of 2018.
Tariffs are likely to limit economic activity in both China and the United States, possibly affecting the growth in oil demand, as less fuel is consumed to transfer goods for trade.
(Reporting by Stephanie Kelly in New York, Julia Payne in London, and Meng Meng and Aizhu Chen in Beijing; Additional coverage by Roslan Khasawneh in Singapore; Montage by Marguerita Choy and Paul Simao)
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