Oil price rises as Anadarko evacuates Gulf of Mexico rigs

Ivan Schwartz
September 6, 2018

Front-month volumes in the crude futures have risen to trade nearly 2.8 million lots of 1,000 barrels in July.

They added: "The impact of the sanctions will spark further civil unrest and public discontent as Iranians struggle to cope with deteriorating economic conditions, increasing unemployment and rapidly rising price levels".

Thanks to this ever escalating trade war, China's manufacturing growth was at its slowest in more than one year this August.

"It remains unclear whether OPEC will be able to absorb a potentially massive fall in Iranian oil exports due to the US sanctions", Commerzbank AG said in a note on Monday. Investors anticipate less supply from Iran as United States sanctions on Tehran begin to bite.

Japan has been asking for a waiver from its ally, saying imports of Iranian crude have been recently falling.

Production by the Organization of the Petroleum Exporting Countries rose 220,000 barrels per day (bpd) in August to a 2018 high of 32.79 million bpd, a Reuters survey showed.

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Fereydoun Barkeshli, President of both the Vienna Energy Research Group and the Iranian Association for Energy Economists has questioned the sustainability of today's oil price rally. India and China's combined purchases of Iranian crude will decline to nearly 1 million barrels a day from about 1.3 million because of the sanctions, according to ESAI Energy.

Brent crude oil was up 20 cents at $77.84 a barrel by 0745 GMT.

Today's WTI trading range is $67.50 - $70.50. Iran is also likely to use any means at its disposal, as it did during the last sanctions, to ensure it is able to export its oil.

Despite these fears, the global markets don't have much to worry about as they are still fairly well supplied. With investors anticipating less supply from Iran due to upcoming US sanctions, and Libya and Venezuela producing far-less than expected, the markets remain vulnerable to unexpected supply disruptions. On Tuesday prices had climbed to $79.72, their highest since May.

"There's been a significant bump in the prompt oil contract that's contributed to the backwardation, and this bullishness is backed by factors such as USA sanctions on Iran", said Stephen Innes, head of Asia Pacific trading at Oanda Corp.in Singapore.

Iran's oil exports are plummeting, as refiners scramble to find alternatives ahead of a re imposition of USA sanctions in early November. "If there is a serious trade disagreement between the US and China, the Chinese consumption of energy will be impacted negatively, from our point of view and the ability to produce and export will be impacted", he said at the World Heavy Oil Congress.

Other reports by GizPress

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