Iran says oil price rise offsets USA sanctions' impact

Ivan Schwartz
October 7, 2018

The US crude oil price is pausing for breath after its strong advance ahead of US sanctions on Iran, which take effect on November 4.

US West Texas Intermediate (WTI) crude futures were up 47 cents, or 0.6 percent, at $74.80 a barrel.

Global benchmark Brent crude oil futures were at $85.03 per barrel up 5 cents from their last close, and not far off the $85.45-peak reached in the previous session, the highest since November 2014.

Some analysts also said Iran is forced to store crude oil as it can not easily close its taps, mainly because it needs the associated gas produced with crude oil to meet very high demand for natural gas and partly because of reservoir issues.

Futures were trading around $75.50 a barrel in NY, up around 0.4 percent.

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South Korea's imports of US crude oil has eclipsed those of Iranian crude oil for the first time. However, the country's refiners since June have cut purchases of Iranian crude ahead of US sanctions. Due to those uncertainties, the market is now very nervous and emotional, and traders and other market participants could continue to make decisions based on those uncertainties and push prices higher, he said. The contract dropped 0.2 percent to $84.80 a barrel on Tuesday. The global benchmark crude traded at a $10.33 premium to WTI for the same month.

In a desperate bid to avoid being blamed for $100 oil, Trump tried bullying OPEC producers to boost production levels to prevent further price hikes ahead of the USA mid-term elections in early November. Trump in July tweeted without evidence that Saudi Arabia would increase its production "maybe up to 2,000,000 barrels" a day. Saudi Arabia is one of the few countries with the ability to significantly raise output. An additional 1.7 MMbbl of oil were stowed in tanks at a key USA pipeline hub in Oklahoma in the five days to October 2, data provider Genscape Inc. was said to have reported. West Texas Intermediate gained almost $2 a barrel to trade above $76. Trade data in Refinitiv Eikon showed Iran's seaborne exports in September were just 1.9 million barrels per day, the lowest level since mid-2016.

Official weekly government data is due from the Energy Information Administration (EIA) on Wednesday.

United States commercial crude inventories rose by 907,000 barrels in the week to September 28, to 400.9-million barrels, the private American Petroleum Institute (API) said on Tuesday.

-With assistance from Stephen Stapczynski.

Other reports by GizPress

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