Oil prices fall on record USA output, stock build

Media: Japan halts imports of oil from Iran

Media: Japan halts imports of oil from Iran

LONDON-Oil prices fell Thursday morning on the back of rising us petroleum stockpiles.

Strategic Petroleum Reserve. After the Oil Weapon had been unsheathed by the oil-producing countries in 1973, the USA government began to hold a Strategic Petroleum Reserve.

A Russian oil company has signed an agreement with Iran worth US$4 billion, and that deal "will be implemented soon". The market will right itself once it realises that there will not be a shortfall in oil, even if Iran's oil exports drop from 2.7 million barrels per day (bpd) to 1 million bpd, as they did under the last period of strong economic sanctions between 2013 and 2015. This new alliance between Saudi Arabia and Russian Federation has meant that OPEC can have an outsized impact on world oil prices.

Oil has fallen from recent highs as the U.S. This makes the purchase of Iranian oil by JXTG Holdings and Idemitsu Kosan impossible.

USA crude oil refinery inputs averaged about 17.2 million barrels per day during the week ending July 13, which was 413,000 barrels per day less than the previous week's average. Japan has alternatives in Saudi Arabia and UAE among others for its oil needs as it prepares to break its oil alliance with Iran. Motor fuel demand also rose from the week before and was up from a year earlier.

OPEC and non-OPEC producers cut oil output in June by 20 percent more than agreed levels, compared to 47 percent in May, two sources familiar with the matter told Reuters on Wednesday. Opec's de facto leader Saudi Arabia, which has been under pressure from US President Donald Trump to pump more and ease prices, said exports this month will be "roughly equal" to June, and they will drop by 100,000 barrels a day in August. According to Petronet of Korea National Oil Corp. on Thursday, Korea imported 6 million barrels of crude oil from Iran in May, only 6.3 percent of the country's total crude oil import volume of 95.18 million barrels. This new mechanism for pricing oil remains outside the dollar's institutions, and so not so exposed to US pressure.

The JCPOA allowed foreign money to flow into Iran in exchange for oil exports and other trade, but the Iranian people saw none of this.

India, vulnerable to U.S. pressure, has said it would only buy Iranian oil if it is able to get a waiver against sanctions from the U.S. government. A drastic reduction of Iran's oil exports (for example, by more than one million bpd) would likely boost Saudi production to numbers not seen since the late 1960s, in an attempt to fulfill market demands. If these trends continue, the price of U.S. crude could yet fall further.

Crude has retreated by about 6 per cent this month as the prospect of a tit-for-tat trade war between the U.S. and China rattled global financial markets.

Recommended News

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.