Oil rises on concern over Saudi and Iranian supply

Ivan Schwartz
August 15, 2018

USA light crude was up 90 cents at $68.10.

Oil prices fell on Wednesday, weighed down by a gloomier global economic outlook and a report of rising US crude inventories, even as USA sanctions on Tehran threatened to curb Iranian crude oil supplies.

Benchmark Brent crude oil was up 10 cents at $72.91 a barrel by 0930 GMT.

However, OPEC ran out the prospect that trade spat between the United States and China to have much impact on the world's oil demand, unless the rifts reach beyond the world's largest two economies. Analysts say it has already hit several emerging market currencies, including the South African rand, Russian ruble, and Mexican peso.

That is compounding worries that a deepening trade war between the United States, China and the European Union will squeeze business activity in the world's biggest economies.

Prices rebounded from the previous session's slide that came as a financial crisis in Turkey sparked fears that possible contagion throughout emerging economies could hurt fuel demand.

But demand for crude may not climb by as much as previously thought, raising concerns that the market may slip into over-supply once again.

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US energy companies last week increased their number of active oil rigs by the most since May, adding 10 rigs to bring the total count to 869, according to the Baker Hughes energy services firm.

Iran's state news agency IRNA reported that an "informed source" inside the country's oil ministry did not provide extensive details and sought to downplay the move as common industry practice. Rising output from Nigeria, Kuwait and the UAE offset the drops.

But then Trump's displeasure with high oil prices and influence over Saudi Arabia has led to augmented production levels.

"Oil prices. fell after the API inventory data showed an unexpected crude build last week", said William O'Loughlin, investment analyst at Australia's Rivkin Securities.

Iran is the third-largest producer in the Organization of the Petroleum Exporting Countries, behind Saudi Arabia and Iraq, pumping 3.65 million bpd in July, Reuters data show.

The overall demand for Opec's crude is now expected to be 32.9 million barrels a day this year, which is around 600,000 barrels a day lower than in 2017.

Other reports by GizPress

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