US Sanctions On Oil Exports Not Impacting Us: Iran

US Sanctions On Oil Exports Not Impacting Us: Iran

Front-month Brent crude oil futures were at $77.56 a barrel at 4.30am GMT, 6c below their last close. US West Texas Intermediate (WTI) crude futures fell 41 cents to $67.18 a barrel. WTI slumped to $65.33 a barrel, the weakest since August 17.

Both contracts have recovered some ground over the last week but are around $10 a barrel below four-year highs reached in the first week of October.

The Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia and non-OPEC member Russian Federation, agreed in June to lift oil supplies, but OPEC then signaled last week that it may have to reimpose output cuts as global inventories rise.

Oil has been caught in the global financial market slump this month, with equities under pressure from the trade conflict between the world's two largest economies.

The United States has imposed tariffs on $250 billion worth of Chinese goods, and China has responded with retaliatory duties on $110 billion worth of US goods.

Financial markets found some support on Tuesday from reports that U.S. President Donald Trump thinks "a great deal" with China is possible on trade.

Trump's goal by exerting energy sanctions on Iran was to minimize the country's sources of income in the current economic war against Iran, he said. He did not elaborate.

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With the Chinese economy slowing down and the impact of the trade dispute with the US likely to hurt growth further, it is widely expected that crude demand will see a drop in the near term.

The speculator group cut its combined futures and options position in NY and London by 42,644 contracts to 216,733 in the week to October 23, the lowest level since September 2017.

From all indications, they appear not slowing down as oil prices take a dip on Tuesday.

Some predicted that $100 per barrel oil by the end of the year was imminent, while Tehran maintained a defiant tone, stating that neither Saudi Arabia nor OPEC would be able to pump enough oil to compensate for the loss of Iranian barrels, estimated between 500,000 bpd and 1 million bpd.

That's an increase of 10 million bpd since the start of the decade and means that these three producers alone now meet a third of global crude demand.

Data from the U.S. Energy Information Administration last Wednesday revealed that U.S. crude stockpiles rose for a fifth straight week. Stockpiles were expected to have risen about 4.1 million barrels in the week ended October 26, an extended Reuters poll showed on Tuesday.

State Department spokesman Robert Palladino told reporters that while the U.S.is seeking to reduce worldwide purchases of Iranian oil to zero, Washington is in the midst of an "internal process" to provide waivers to countries that have made "significant" reductions to their purchases of Iranian oil.

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