Oil rose to a one-month high as the risk of a supply crunch continued to buoy markets, with a U.S. demand that Iran’s customers halt their imports overshadowing Saudi Arabia’s promise to boost output.

New York futures gained as much as 1.3 per cent, after advancing 3.6 per cent on Tuesday. Renewed U.S. sanctions that may curb OPEC member Iran’s exports, a Canadian oil-sands outage and turmoil in Libya have lifted prices. Meanwhile, Saudi Arabia is said to plan ramping up production, a move that would strain its spare capacity at a time when the market is already coping with falling Venezuelan output and shrinking American inventories.

Crude is approaching the highs of May as a decision by the Organization of Petroleum Exporting Countries and its allies to boost output by 1 million barrels a day is seen “ a little short” of what’s required to ease supply concerns. U.S. President Donald Trump’s administration is demanding that Iran’s oil customers end imports by a Nov. 4 deadline and doesn’t want to offer any extensions or waivers, as it targets the Islamic Republic’s economy.

“We find ourselves in a period of erratic global politics that injects a considerable amount of volatility,” said Norbert Ruecker, head of macro and commodity research at Julius Baer & Co. “The stage is set for further geopolitical confrontation.”

West Texas Intermediate crude for August delivery rose as much as 91 cents to $71.44 a barrel on the New York Mercantile Exchange, and traded at $71.40 as of 9:14 a.m. local time. The contract rose $2.45 to $70.53 on Tuesday. Total volume traded Wednesday was about 8 percent below the 100-day average.

Brent futures for August settlement traded at $77.09 a barrel on the London-based ICE Futures Europe exchange, up 78 cents. Prices on Tuesday added US$1.58 to close at US$76.31. The global benchmark crude was at a US$5.59 premium to WTI.

State oil giant Saudi Aramco aims to raise supplies next month to about 10.8 million barrels a day, according to people briefed on Saudi policy, following pressure from Washington to fill any supply gaps and alleviate high prices before the American midterm elections in November. The U.S. administration wouldn’t rule out waivers or extensions to the November deadline for Iran’s customers, yet isn’t discussing them either, a State Department official said.

“Saudi Arabia faces the daunting, if not impossible, task of managing the oil market; prices are going to stay elevated,” said Victor Shum, a vice president at consultants IHS Energy. “The uncertainty over Iranian crude supply is going to cast a shadow over the oil market. The cut in supply may be even bigger than thought, depending on how successful the U.S. is in getting countries not to buy Iranian oil.”

In Libya, supply concerns intensified after forces loyal to Khalifa Haftar, a commander in the politically divided nation’s eastern region, turned over ports with a combined export capacity of 800,000 barrels a day to the National Oil Corp. in Benghazi, in the east. The transfer of ports, including Libya’s biggest, threatened to unsettle markets just days after OPEC agreed to raise output.

A market structure known as backwardation persisted as WTI for August settlement was about US$1.40 higher than the September contract, signaling a shortage after a Syncrude Canada oil-sands outage. Meanwhile, Brent for near-term delivery was only about 17 cents higher than later cargoes, a much smaller premium than in the U.S. market.

Crude prices were also supported by an American Petroleum Institute report that was said to show U.S. inventories shrank by 9.23 million barrels last week, bigger than a 3 million-barrel drop estimated in a Bloomberg survey. If that’s confirmed by Energy Information Administration data later on Wednesday, it will mark a third week of declines.

Oil-market news:

Kazakhstan’s output fell by 240,000 barrels a day between Sunday and Tuesday, data from the country’s Energy Ministry showed. Executives from Exxon Mobil Corp., Chevron Corp. and Total SA all took shots at Trump’s trade plans at a conference in Washington, expressing concern that U.S. tariffs are a risk to oil and gas demand, and that restrictions on importing steel could impede one of the country’s fastest-growing major industries. Baker Hughes will emerge from the shadow of parent General Electric Co. amid unprecedented turmoil and dislocation in the global oil business. Futures rose 2.5 percent to 483.1 yuan a barrel on the Shanghai International Energy Exchange in afternoon trading, after gaining 1.1 per cent on Tuesday.