Oil slips on demand concerns, prospect of OPEC+ hike

Oil weakened on Friday and was on track for a weekly drop, pressured by concerns about demand and the prospect of bigger supply from OPEC+, although Libyan output disruptions limited the decline.

OPEC+ is set to proceed with a planned oil output hike from October, as the Libyan outages and pledged cuts by some members to compensate for overproduction counter the impact of sluggish demand, six sources from the producer group told Reuters.

Brent crude futures for October delivery, which expire on Friday, were down $1.04, or 1.3%, at $78.90 a barrel by 1419 GMT. U.S. West Texas Intermediate crude futures slipped $2.15, or 2.8%, to $73.76.

The sell-off shows "how weak market sentiment is, considering the larger supply disruptions in Libya had only a temporary price support," said UBS analyst Giovanni Staunovo, adding that the timing of how long the disruptions may last looked uncertain.

Both benchmarks, which a day earlier settled more than $1 higher, were on course for weekly drops. 

More than half of Libya's oil production, or about 700,000 barrels per day, was offline on Thursday and exports were halted at several ports following a standoff between rival political factions. 

Consulting firm Rapidan Energy Group has estimated production losses could reach between 900,000 and 1 million bpd and last for several weeks.

Iraqi supplies are also expected to shrink after the country's output surpassed its OPEC+ quota, a source with direct knowledge of the matter told Reuters on Thursday. 

Iraq plans to reduce its oil output to between 3.85 million and 3.9 million bpd next month.

Still, any boost to crude prices from supply cuts could be limited by ongoing concerns about weakened demand, particularly from China, said George Khoury, global head of education and research at CFI Financial Group.