South Korea denies stopping Iran's oil imports

Oil Prices Up on Weak US Crude Inventory

Oil Prices Up on Weak US Crude Inventory

Oil prices rose on Monday as investors focused on tight market conditions after data late last week showed US crude inventories fell to their lowest in more than three years.

Meanwhile, Brent oil price was under pressure on Friday amid an escalating global trade tensions.

On Friday, western media reported that South Korea will not lift any Iranian crude and condensate in July, halting all shipments for the first time in six years amid USA pressure to cut all imports of Iranian oil from November.

China has said it would immediately retaliate with its own tariffs, and U.S. President Trump said on Thursday the United States may ultimately impose tariffs on more than a half-trillion dollars worth of Chinese goods, in what may become a fully blown trade war.

Crude Oil WTI futures for delivery in August traded at $74.8 per barrel, or 0.38 percent higher from their previous close.

American crude shipments to China now stand around 400,000 barrels per day (bpd), worth $1 billion a month at current prices.

Beijing has threatened a 25 percent tariff on US crude imports, although it has not specified an introduction date.

USA markets also garnered support from a government employment report showing better-than-expected growth in jobs.

China has said it will retaliate, and major Chinese ports have already delayed clearing goods from the USA, according to several sources.

Tariffs would make USA oil uncompetitive in China. In May, Indian refiners imported 4.7 million barrels or about nine times more than April and the most of any month based on US government data going back to 2015.

OPEC and non-OPEC producers reached an agreement in December 2016 to curtail oil output jointly and ease a global glut after more than two years of low prices.

The tightness at Cushing and the potential increase in Gulf exports "both have implications for how quickly the prompt overhang in the market can clear, and thus provide some direction for prices", Chauhan said.

"Looming U.S. sanctions on Iran, however, are causing serious concerns amongst market players".

"Iran's exports are some 2.7 million bpd, including condensate", it noted.

Some are already reacting.

"If the Saudis and others replace the losses from Iran, there will be basically no spare capacity left", Societe Generale analyst Michael Wittner said.

Two other sources said South Korea cancelled July loadings of crude and condensate cargoes from Iran as it was uncertain whether the country would receive an exemption from U.S. sanctions on Iran trade.

"At the same time, Venezuela can do nothing to stop its own production decline and will lose another 400,000 bpd by year-end with production going to below 1 million bpd", FGE said, adding that another 300,000 bpd of Libyan capacity was disrupted.

Saudi Arabia told Opec that it increased production by nearly 500,000 barrels per day last month.

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.