Sunday, 21 October, 2018

OPEC chief says Iran still 'very important' as U.S. sanctions loom

Tale of Two Oil Markets Brent Bulls Split From US Optimists For oil investors this is both the best of times and the worst of times depending on which crude benchmark you trade
Priscilla Morrison | 18 September, 2018, 18:38

A pump jack operates at sunset in an oil field in Midland, Texas U.S. August 22, 2018.

At 08:02 a.m. EDT on Tuesday, WTI Crude was up 0.80 percent at $69.54, while Brent Crude was trading up 0.79 percent at $78.71.

The tariffs are likely to limit economic activity in both the China and the United States and that should lower oil demand growth as less fuel is consumed to move goods for trade.

China said it had no choice but to retaliate against new USA trade measures after Trump imposed 10 percent tariffs on about $200 billion worth of Chinese imports.

"That has the potential to be a demand-killer and that is why the market is trading into the red", said Bob Yawger, director of energy futures at Mizuho in NY.

The escalating trade row is raising concerns about the potential for slower growth in oil consumption, offsetting supply concerns stemming from upcoming US sanctions on Iran over its nuclear programme.

Iranian crude oil export loadings have declined by 580,000 bpd in the past three months, Bank of America Merrill Lynch analysts said in a note to clients.

More news: Russia says it has new evidence that proves Ukraine shot down MH17

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. US sanctions affecting Iran's petroleum sector due to come into force from November 4.

US President Donald Trump has called for OPEC members, primarily US ally Saudi Arabia, to raise their production, and warned importers to stop buying oil from Iran or face American sanctions.

The Bank of America Merrill Lynch has said that ahead of the United States crude sanctions against Iran in November, the oil producer has decreased its export loadings by 580,000 barrels per day in the past three months.

Since spring when the Trump administration said it would impose the sanctions, crude traders have priced in a risk premium reflecting the supply shortages that may occur when exports from Iran, the third-largest OPEC producer, are cut.

Russian Federation has said that Moscow is prepared to work with the USA to balance the oil market after the two countries had a meeting last week to discuss boosting oil output.

Earlier this month, sources at OPEC and the industry told Reuters that Saudi Arabia was looking to manage the oil market in a way that would keep oil prices in the $70 to $80 band for the time being, as the Kingdom wants a floor under prices to monetize oil exports and at the same time keep a ceiling until at least the USA mid-term elections in November.

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