Brent crude prices will sustain levels above $70 a barrel for longer, as U.S. President Donald Trump's decision to reimpose sanctions on Iran is likely to tighten supply, a Reuters poll of analysts showed on Wednesday.   

A survey of 11 analysts showed Brent crude prices were likely to average $71.22 a barrel this year and $71.26 in 2019, a sharp increase from the $67.40 and $66.39-per-barrel levels forecast in the April poll. Brent has averaged about $69 a barrel this year thus far and nearly touched $80 a barrel this week.

"Oil markets should become tighter due to a lower output from Iran, coupled with an ongoing contraction in Venezuelan output and OPEC cuts," said Daniela Corsini, commodity market economist at Intesa Sanpaolo in Milan.

U.S. light crude was seen averaging $66.62 a barrel this year and $67.09 a barrel in 2019. This compares with an outlook for $63.23 per barrel in 2018 and $62.16 in 2019 in our April poll.    

Last week, Trump pulled the United States out of a 2015 international nuclear pact with Iran, and plans to reimpose U.S. economic sanctions on the country. That has cast uncertainty over global oil supplies, and investors lately have been betting on prices exceeding $80 or $90 a barrel, though European nations are not likely to follow suit as they did during the Obama administration.

Five of the 11 analysts polled expected a supply reduction from Iran of between 300,000 to 500,000 barrels per day (bpd), while exports from the country were expected to drop by a maximum of 700,000 bpd by the first half of 2019. The nation currently produces 3.8 million bpd.

Oil prices are hovering near 3-1/2-year highs, having jumped over 70 percent over the last year, boosted by rising demand and a deal to curb output by the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia and other producers, including Russia. The International Energy Agency on Wednesday warned that demand could be sapped by higher-than-expected prices.

"Global oil inventories are already either below or at the five-year average. This means that the market will have little cushion against any other unexpected production outage at a time when geopolitical risks abound. These risks can come from Libya, Nigeria and Venezuela," said Shakil Begg, head of Thomson Reuters Oil Research and Forecasts.

A global oil glut has been virtually eliminated, figures published by OPEC showed on Monday, with Venezuela, whose output has plunged due to an economic crisis, reporting production fell to 1.5 million bpd in April, lowest in decades.

A majority of analysts said OPEC was unlikely to prematurely end its output curbs, while some analysts said the imposition of trade restrictions could affect compliance levels and provide countries like Saudi Arabia and Russia an opportunity to regain market share.

Commerzbank and Emirates NBD had the lowest 2018 Brent price forecast at $69 a barrel, while Nomisma Energia had the highest forecast for the year at $75.41. 

© Reuters News 2018