Oil prices rose on Monday, as traders kept the focus on supply disruptions and the possible hit to crude output from US sanctions on Iran. October Brent crude futures were up 76 cents at $75.52 a barrel by 11:57 a.m. EDT (1557 GMT). The September contract expires on Tuesday. US crude futures rose $1.51 at $70.21 a barrel.
The market held gains even after a Reuters survey showed OPEC increased production in July. Prices remain buoyed by a tight supply outlook, with global inventories down from record highs in 2017 and US inventories at a three-year low, said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.
"If you take a step back and look at where global inventories and US inventories are, you're seeing a tighter picture than where we were a year ago," McGillian said. "Overall, I think the market is in the process of stabilizing."
Saudi Arabia last week said it was suspending oil shipments through the Red Sea's Bab al-Mandeb strait, one of the world's most important tanker routes, after Yemen's Iran-aligned Houthis attacked two ships in the waterway.
"The ongoing concerns about the lack of supply coming out of the Bab al-Mandeb strait on top of continued disruption in Venezuela seems to be giving the market momentum, not to mention the potential loss of Iranian supply," said Phil Flynn, analyst at Price Futures Group in Chicago.
Traders said prices pulled back after information supplier Genscape reported that inventories at Cushing, Oklahoma, the delivery hub for US crude, rose almost 200,000 barrels, or nearly 1 percent, from Tuesday to Friday last week.
Oil prices have rebounded from recent lows over the last two weeks, as looming sanctions on Iran have already started to curtail exports from that country.
"It is the impact of the US sanctions on Iran that will decide the next $15 a barrel," PVM Oil Associates Tamas Varga said in a note.
"The best-case scenario is that the US provides meaningful sanction waivers in the run-up to the mid-term elections and Iran can get away with a loss of around 500-700,000 barrels per day of exports. In case, however, President Trump plays hardball and puts its allies and foes under maximum pressure the loss of barrels could amount to 2 million barrels per day."