Oil prices rose today, supported by concerns that falling Iranian output will tighten markets once US sanctions bite from November, but gains were limited by higher supply from OPEC and the US.
Brent crude oil was up 50 cents at $78.14 a barrel this afternoon, while US crude was 10 cents higher at $69.90.
The two benchmarks have risen strongly over the last two weeks with Brent gaining more than 10% on expectations that global supply will tighten later this year.
US sanctions are already curbing exports from Iran.
Analysts said that exports from OPEC's third-biggest producer are falling faster than expected and worse is to come ahead of a looming second wave of US sanctions. Fears of an impending supply crunch are gaining traction, they added.
But global oil markets are still fairly well supplied.
Production by the Organisation of the Petroleum Exporting Countries rose 220,000 barrels per day (bpd) in August to a 2018 high of 32.79 million bpd, a Reuters survey showed.
Output was boosted by a recovery in Libyan production and as Iraq's southern exports hit a record high.
US drillers added oil rigs for the first time in three weeks, increasing the rig count by 2 to 862. The high rig count has helped lift US crude production by more than 30% since the middle of 2016 to 11 million bpd.
Meanwhile, trade disputes between the US and other major economies including China and the European Union are expected to hurt oil demand if they are not settled soon.
China's manufacturing activity grew at the slowest pace in more than a year in August, with export orders shrinking for a fifth month, a private survey showed today.