By Christopher Alessi 

Oil prices rose Tuesday, building on the four-year high reached in the wake of a weekend decision by OPEC and its production allies to maintain their current production targets.

Light, sweet crude for November delivery rose 0.5% to $72.46 a barrel on the New York Mercantile Exchange. Brent crude, the global benchmark, rose 1% to $81.31 a barrel.

Meeting in Algiers on Sunday, the Organization of the Petroleum Exporting Countries and its production allies, led by Russia, reiterated that they want to adhere to current production quotas first implemented at the start of 2017. That means continuing a gradual ramp-up in production as the producers had agreed at the start of the summer in an effort to bring down overcompliance with the initial agreement.

However, the producers declined to announce specific plans to raise production further, seemingly defying calls by President Trump for the cartel to increase output to put a cap on prices -- sending prices soaring on Monday.

OPEC and Russia's public comments "showed comfort and satisfaction with today's price levels and little willingness to additionally boost output, " said Norbert Ruecker, head of macro and commodity research at Julius Baer. "Supply concerns rise as the Iran embargo nears, which supports oil prices," he added.

Oil investors next will turn their attention back to the U.S., where the Energy Information Administration is due to release its weekly oil report on Wednesday morning. Many analysts are expecting another counter-seasonal decline in U.S. crude oil inventories that could add to the market's bullish tenor. U.S. crude stockpiles fell to 394 million barrels in last week's report, the lowest since February 2015.

"The glut is gone," said Phil Flynn at Price Futures in Chicago, referring to oversupply problems in a recent oil-price downturn that saw U.S. oil inventories as high as 536 million barrels in March 2017. "Global oil prices are surging because we are now facing a market that is undersupplied."

Ahead of the official EIA report, the American Petroleum Institute, an industry group, is scheduled to release its own weekly report on U.S. oil inventories Tuesday afternoon.

U.S. sanctions targeting Iran's oil exports are set to take effect Nov. 4, raising concerns about a global supply crunch toward the end of the year. Saudi Arabia -- the de facto head of OPEC -- and Russia have indicated they can produce more to fill the gap, despite concerns over dwindling spare capacity. But there is still widespread disagreement on how the cartel and its allies should contain crude prices once the Iran sanctions take effect.

OPEC and 10 producers outside the cartel -- led by Russia -- first agreed in late 2016 to hold back production by around 1.8 million barrels a day starting in January 2017, in an effort to rein in a supply glut that had weighed on prices since late 2014.

However, as a result of deeper cuts from countries like Saudi Arabia and production outages in other OPEC members -- including Iran and Venezuela -- compliance with the deal has exceeded the planned quotas, rising to around 150% in May. OPEC and its partners agreed in late June to bring compliance down to 100%, a goal they reiterated on Sunday. Compliance with the deal stood at 129% in August, according to OPEC.

Among refined products, gasoline futures for October delivery rose 0.6% to $2.066 a gallon. Diesel futures rose 0.8%, to $2.3103 a gallon.

--Dan Molinski contributed to this article.

Write to Christopher Alessi at christopher.alessi@wsj.com

(END) Dow Jones Newswires

September 25, 2018 11:35 ET (15:35 GMT)

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