Oil slips as economic concerns counter tightening supplies

Oil prices climb as Iran sanctions loom

Oil prices climb as Iran sanctions loom

The price of West Texas Intermediate, the US benchmark, was up 1.20 percent to $70.45 per barrel early Wednesday afternoon.

The IEA also said that higher output from OPEC managed to more than offset seasonal declines from non-OPEC members.

The falls were due to concerns of a potential slowdown in fuel demand growth because of trade disputes between the United States and China, the world's two largest oil consumers, as well as emerging market turmoil.

Brent crude oil fell $1.56, or 2 per cent, to settle at $78.18 per barrel.

"A drawdown in crude oil inventories isn't very comforting when you're going to lose a lot of Iranian crude in a couple of weeks", said Phil Flynn, an analyst at Price Futures Group.

Also supporting prices were supply concerns surrounding US sanctions on Iran.

Oil prices rose on Wednesday following a report of declines in USA crude inventories and as looming sanctions against Iran raised expectations of tightening supply, while top producer Russian Federation warned of a fragile global crude market.

The issue of additional U.S. sanctions that are being imposed on Iran was again a major subject of market attention, with Russian Energy Minister Alexander Novak warning of the impact that the the USA action could have on Iranian oil sales.

The increases extended a more than 2 percent climb in both crude benchmarks the previous session.

Oil traded below $70 a barrel as investors assessed the outlook for an oil supply shortage with Iran sanctions set to kick in against whether Opec can fill in the gap by raising output. Increased volumes from Nigeria and Saudi Arabia as effectively as elevated production in Libya and Iraq served to outweigh these drops.

The sanctions on Iran have started forcing buyers to forego imports from the Islamic republic before a 4 November deadline.

Opec, the Organization of the Petroleum Exporting Countries that accounts for 40% of global production, cut its forecast for oil demand growth next year in its monthly report.

A report showing declining USA crude inventories also supported prices.

While Iran's liquefied petroleum gas (LPG) exports in August jumped to the highest in almost two years, mostly thanks to China which imposed tariffs on U.S. LPG, Tehran lost customers in East Africa-Kenya and Tanzania have stopped importing LPG from Iran due to the sanctions, according to Platts tracking data and sources.

It expects demand growth of 1.41 million barrels a day in 2019, revising downwards previous projections by 20,000 bpd. Iranian oil exports should go from about 2.7 million bpd-2.8 million bpd from earlier this year to about 1 million bpd-1.2 million bpd by the end of this year, Sen told CNBC earlier this 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.