Oil prices have jumped to a four-year high as traders scramble to find alternative sources of crude ahead of USA sanctions against Iran, which come into effect next month.
But Brent spot prices have climbed by more than $12 per barrel (17 percent) since mid-August while the six-month calendar spread has risen nearly $2.60 and swung from contango into a pronounced backwardation.
The most-active December Brent crude futures contract LCOv1 settled up 59 cents at $81.38 a barrel, below the session high of $81.90 but still within sight of Tuesday's four-year high of $82.55.
This would be the first highest trade deal hitting above the USD$85 per barrel threshold since November of 2014.
India imported 220 million tonnes (mt) of crude in the year to March 2018, 3 per cent more than the previous year.
"Oil prices continue to climb, supported by the nearing Iran embargo and related supply concerns", said Norbert Ruecker, head of commodity research at Swiss bank Julius Baer.
Sentiment was lifted by a last-gasp deal to salvage NAFTA as a trilateral pact between the United States, Mexico and Canada, rescuing a $1.2 trillion a year open-trade zone that had been about to collapse.More news: Days after RK studios closes, Krishna Raj Kapoor surrenders to cardiac arrest
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U.S. sanctions are due to begin on November 4, and analysts are seeing a potential shortage of spare production capacity in the short-term, which might prompt huge storage drawdowns. "The NAFTA deal would boost oil prices because it increases the growth prospects not only for Canada and the USA, but for North America as a whole", Phil Flynn, an analyst at Price Futures Group in Chicago, told Reuters.
Global trade conditions seemed worsened.
The next three months are a "special situation", given the sanctions on Iranian oil set to begin in early November, which is "already reducing their exports", said Williams.
US President Donald Trump spoke to Saudi King Salman on Saturday on ways to maintain sufficient supply. "However, such optimistic claims are falling on deaf ears", PVM Oil Associates strategist Stephen Brennock said.
"If Chinese refiners do comply with US sanctions more fully than expected, then the market balance is likely to tighten even more aggressively", Emirates NBD analyst Edward Bell wrote in a note.
China's Sinopec Corp is halving loadings of crude oil from Iran this month, as the state refiner comes under intense pressure from Washington. An oil analyst has said crude prices will touch $100 per barrel as producers have no means to stop such a spiral - something not seen since 2014.