Oil drops to around $83 on expectations Iran will maintain some exports

Ivan Schwartz
October 8, 2018

However, a USA government official said on Friday that the country could consider exemptions for nations that have already shown efforts to reduce their imports of Iranian oil. Elsewhere, the second largest importer of Iranian oil, India, is planning to purchase 300kbpd of Iranian oil in November.

State refiners Indian Oil Corporation Ltd (IOC) and Mangalore Refinery and Petrochemicals Ltd (MRPL) have contracted 1.25 million tonnes of Iranian oil for import in November.

The U.S.is imposing the sanctions because Iran has reneged on a 2015 nuclear deal-a point on which other major powers disagree-and because it wants Iranian forces to pull out of Syria and Iraq.

"We expect the global leadership to acknowledge India's need for Iran's oil", Pradhan said, adding that he wanted major oil producers like Saudi Arabia to raise production.

Ralph Leszczynski, Banchero Costa's head of research in Singapore, tells TradeWinds: " The US sanctions on Iranian oil imports are strictly unilateral, as they have been actively resisted by other buyers of Iranian oil. "So we export as much as 2 barrels for any barrel that disappeared from Iran recently", he said.

According to Indian Oil Minister Dharmendra Pradhan, two local companies have placed orders to import Iranian crude next month.

Pradhan reportedly said Monday that India does not know if it would get a waiver from the U.S. He said any countries or companies that conduct transactions with Tehran were liable to face secondary sanctions.

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"Likely, India and Iran will agree to use Rupee payments instead of United States dollar payments, something already tried between 2013 and 2015, with Iran then using Rupees to import food, medicines and other commodities from India", said Leszczynski.

Opec accounts for around 40% of the global production.

Brent crude fell 0.9 percent to $83.38 per barrel, after hitting a four-year high of $86.74 last week.

Reports about falling Iranian exports of oil and condensate abound, but there is one important detail: usually, these are reports about tracked tankers carrying Iranian oil and condensate.

The cost of the Indian basket of crude rose to $84.14 a barrel on 5 October, according to the Petroleum Planning and Analysis Cell.

On Monday, petrol and diesel were selling at Rs 82.03 per litre and Rs 73.82 per litre, respectively, in New Delhi. Many BJP-ruled states have also cut the value-added tax (VAT) on fuel by an equivalent amount.

"In effect, the government has asked the OMCs to sell petrol and diesel at subsidized prices, for which they will not be reimbursed", the report said.

Other reports by GizPress

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