Oil prices edge up as U.S. supply tightens, Iran sanctions loom

Prices were also pushed up by looming U.S. sanctions against Iran, which threaten to cut supplies to an already tight market despite pledges by producer cartel OPEC to raise output to make up for the disruptions.

U.S. West Texas Intermediate (WTI) crude futures CLc1 rose 46 cents, or 0.6 percent, to $74.60 a barrel at 0343 GMT (11.43 p.m. ET), compared with their last settlement. On Tuesday, WTI hit its highest since November 2014 at $75.27.

Brent crude futures LCOc1 were changing hands at $78.10 per barrel, up 34 cents, or 0.4 percent, from their last close.

Trading activity is expected to be limited on Wednesday by the U.S. Independence Day holiday.

U.S. crude inventories fell by 4.5 million barrels to 416.9 million barrels in the week to June 29, the American Petroleum Institute (API) said on Tuesday. Gasoline and distillate stocks, which include diesel and heating oil, also fell, the API said.

“The draw in distillates was against expectations,” said Sukrit Vijayakar, managing director of energy consultancy Trifecta.

The decline in fuel inventories was largely down to the outage at Syncrude Canada’s 360,000 barrels per day (bpd) oil sands facility near Fort McMurray, Alberta. The outage is expected to last through July.

But brokerage Phillip Futures said the lower stocks come “as gasoline demand spikes on peak driving season in the northern hemisphere”.

Outside North America, looming U.S. sanctions against major oil exporter Iran were the focus of attention.

The U.S. government has demanded that all countries stop buying Iran’s oil from November.

To make up for potential shortfalls in supply from Iran and other disruptions including in Libya and Venezuela, the Organization of the Petroleum Exporting Countries (OPEC) has agreed with Russia and other oil-producing non-OPEC members to raise output from July.

OPEC-member Iran, however, has warned it would not accept other producers reaping the benefits by taking its market share.

Iran’s President Hassan Rouhani on Tuesday said it was “unwise to imagine that some day all producer countries will be able to export their surplus oil and Iran will not be able to export its oil.”