Oil prices rose by 1 percent on Thursday, pushed up by the prospect of tighter markets due to U.S. sanctions against major crude exporter Iran, which are set to be implemented in November.
Front-month Brent crude futures were at $82.23 per barrel at 0650 GMT, up 89 cents, or 1.1 percent from their last close, and just off Tuesday's four-year high.
U.S. West Texas Intermediate (WTI) crude futures were at $72.47 a barrel, up 90 cents, or 1.3 percent from their last settlement.
Traders said oil markets were tightening ahead of Washington's planned sanctions on Iran's petroleum industry from Nov. 4.
"We view that crude market risks are heavily skewed to the upside and whilst we are not explicitly forecasting Brent to rise to $100 per barrel, we see material risks of this coming to fruition," Japanese bank Mitsubishi UFJ Financial Group said in a note to clients.
At its 2018 peak, Iran exported around 3 million barrels per day (bpd) of crude oil, equivalent to 3 percent of global consumption.
Shipping data on Thomson Reuters Eikon shows Iran's September exports fell to around 2 million bpd as buyers around the world bow to U.S. pressure and cut imports.
The Organization of the Petroleum Exporting Countries (OPEC) has little spare capacity to make up for an expected shortfall in Iranian exports. The country is OPEC's third-largest producer.
OMAN CRUDE SPIKES
Reflecting expectations of lower supply from the Middle East, Oman crude futures on the Dubai Mercantile Exchange touched their highest in four years on Wednesday, briefly jumping above $90 a barrel.
"Oil prices remain in the Bulls domain amid concern that U.S. sanctions on Iranian crude oil exports will result in much tighter physical market conditions once they take effect in November," said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore.
"Markets could still be underestimating the supply crunch from Iran sanctions," he added.
While global oil markets tighten, supply in the United States is ample, thanks to rising output.
U.S. crude production hit a record 11.1 million bpd in the week ending Sept. 21, according to data from the Energy Information Administration (EIA) on Wednesday.
That is an increase of almost a third since mid-2016.
Commercial crude stocks rose by 1.85 million barrels, to 395.99 million barrels, the EIA data showed.
"Seasonal refinery maintenance and ongoing crude production growth is driving U.S. crude stock builds," U.S. bank Citi said in a note.
(Reporting by Henning Gloystein; editing by Richard Pullin and Christian Schmollinger)