UPDATE 3-Oil edges up on supply worries, but Trump's call for lower prices drags

drags@

* U.S. President Trump urges OPEC to lower prices

OPEC, its allies to gather on Sunday in Algeria

* They are unlikely to discuss crude output increases (Recasts on rising prices)

By Jane Chung

SEOUL, Sept 21 (Reuters) - Oil futures inched up on Friday amid concerns over supply as U.S. sanctions on Iran's crude exports loom, although calls by U.S. President Donald Trump for lower oil prices dragged.

International benchmark Brent crude for November delivery was up 26 cents, or 0.33 percent, at $78.96 a barrel by 0647 GMT.

U.S. West Texas Intermediate crude for October delivery was up 7 cents, or 0.10 percent, at $70.39 a barrel.

Trump on Thursday called on the Organization of the Petroleum Exporting Countries (OPEC) to lower prices, saying on Twitter "they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices".

OPEC and its allies are scheduled to meet on Sunday in Algeria to discuss how to allocate supply increases to offset a shortage of Iran supplies due to U.S. sanctions.

Trump's remarks just days before the OPEC meeting put "a focus on the likely supply impacts of U.S.-led Iran sanctions", said Stephen Innes, head of trading for Asia-Pacific at OANDA in Singapore.

"The market had until that point been trading fluidly with the assumption that Saudi Arabia is now comfortable with Brent at $80 or even higher, which is challenging the market's long-held supposition that prompt Brent between $70 and $80 was OPEC's sweet spot," Innes said.

Brent has been trading just below $80 a barrel, backed by concerns of supply shortages from looming U.S. sanctions against Iran, which are set to take effect in November.

"Iranian crude exports are coming earlier and bigger-than-expected, at a time seasonal demand is strong. With spare capacity also falling sharply, the market remains exposed to supply-induced price shocks," ANZ Bank analysts wrote in a report.

Although supply worries have pushed up oil prices, OPEC and its allies were not likely to agree to an official increase in crude output at this weekend's meeting, OPEC sources said.

(Reporting By Jane Chung; additional Reporting by Aaron Sheldrick in Tokyo; editing by Darren Schuettler and Richard Pullin)