Oil prices inch up as supply concerns outweigh US output assurances

Ivan Schwartz
September 21, 2018

In a move heavily opposed by Iran, OPEC and other oil producers including Russian Federation agreed in June to boost crude output by around a million barrels a day, reversing course after supply cuts that had cleared a global glut and boosted prices.

West Texas Intermediate crude for October delivery advanced 94 cents to settle at $69.85 a barrel on the New York Mercantile Exchange.

The Organization of Petroleum Exporting Countries is concerned by threats to crude supply from large producers such as Iran, the group's top official said.

Oil futures rose more than 1 percent on Tuesday on signs that OPEC would not be prepared to raise output to address shrinking supplies from Iran, and as Saudi Arabia signaled an informal target near current levels.

Refineries in the USA consumed about 17.7-million barrels a day of crude oil last week while China's refiners used about 11.8-million barrels a day in August, according to government data from the countries, the most among the world's countries.

US sanctions affecting Iran's oil exports come into force on November 4 and many buyers have already scaled back Iranian purchases.

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USA crude stockpiles rose by 1.2 million barrels to 397.1 million in the week to September 14, the American Petroleum Institute said.

Cementing that arrangement would be one of the topics of discussion as OPEC meets this Sunday in Algeria, he added. Iran's crude exports are already falling as the US prepares to curb Tehran's ability to sell oil and participate in global financial markets.

Bloomberg reported on Tuesday, citing unnamed Saudi sources, that the kingdom was now comfortable with prices above $80 per barrel, at least for the short term.

U.S. oil takes a step backwards as American crude inventories continue to outstrip demand.

Output from Iran has hit its lowest level since July 2016 as top buyers India and China distance themselves from Tehran due to looming United States sanctions on November 5, according to the International Energy Agency. The news agency reported that while the kingdom had no desire to push prices higher than $80 a barrel, it may no longer be possible to avoid it because of tightening supplies amid United States sanctions against Iran.

On the other hand, Bloomberg claimed that sources with direct knowledge of the matter said that the White House could announce 10% tariffs on $200 billion worth of Chinese good as early as Monday to eliminate the upbeat mood surrounding crude oil prices.

Other reports by GizPress

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