Oil dips from recent highs on hopes of alternatives to Iran supply

Oil prices on Friday dipped away from multi-year highs reached the previous session on hopes that alternative supplies could replace a looming drop in Iranian exports when US sanctions against Tehran are re-imposed.

The United States plans to re-introduce sanctions against Iran, which produces around 4 percent of global oil supplies, after abandoning an agreement reached in late 2015 that limited Tehran's nuclear ambitions in exchange for removing US-Europe sanctions.

The sanctions come amid an oil market that has been tightening due to strong demand, especially in Asia, and as top exporter Saudi Arabia and No.1 producer Russia have led efforts since 2017 to withhold oil supplies to prop up prices.

Brent crude futures, the international benchmark for oil prices, were at USD 77.329 per barrel at 0308 GMT, down 19 cents, or 0.2 percent, from their last close. Brent the previous day hit its highest since November 2014 at USD 78 a barrel.

US West Texas Intermediate (WTI) crude futures were down 11 cents at USD 71.25 a barrel, but still not far off Thursday's November 2014 high of USD 71.89 per barrel.

Many analysts expect oil prices to rise to USD 80-USD 100 per barrel later this year, once US sanctions start to bite and Iran's exports start sinking.

There are, however, signs that other suppliers from within the Organization of the Petroleum Exporting Countries (OPEC) will step up output to counter the Iran disruption.

"The market is now focused on OPEC and other producers' ability to react to this potential supply disruption," ANZ bank said on Friday.

"Investors are increasingly viewing Kuwait and Iraq as the producers with the best ability to raise output quickly in response to any fall in Iranian exports," it added.

Outside OPEC, soaring US crude oil production may also help fill Iran's supply gap, hitting another record last week by climbing to 10.7 million barrels per day (bpd).