Oil prices rise amidst United States sanctions against Iran
10 August, 2018, 14:45 | Author: Kristi Dunn
Oil markets have entered a brief period of calm but a storm might be looming later this year when new USA sanctions are poised to slash supplies of Iranianoil, the International Energy Agency said on Friday. Meanwhile, the production of Syncrude Canada's offline on its sands facility is impacting the market.
Futures in NY were little changed after a 0.8-percent increase on Monday.
Brent for October settlement traded at $73.60 on the London-based ICE Futures Europe exchange, down 15 cents. In addition, Libya reopened some of the closed oil ports, which raised the market expectations of the growth of oil supplies.
The move is likely to make a severe impact on global crude supply.
US Gulf Coast stocks fell 861,000 barrels to 216.47 million barrels.
Beijing's decision to exclude U.S. crude reflected China's reliance on imports.
"Without the extra Saudi oil we had in June, it's hard to crunch the numbers and get a lower price going into the end of the year", said John Kilduff of Again Capital.
Amid widespread concern that the revived US sanctions against Iran, which shipped out nearly three million barrels per day of crude in July, would tighten global supply, Brent crude oil futures rose 86 cents to $74.61 per barrel at 1052GMT and US West Texas Intermediate (WTI) crude futures were up 59 cents at $69.60 a barrel.
Saudi Arabia is producing around 10.4 million bpd and could in theory raise output to above 12 million bpd. The crude oil imports maintained the same levels during the last two weeks. At that time, Beijing threatened a 25 percent tariff on USA crude imports, although it did not issue a specific date for the move.
For the production expectations, the EIA on Tuesday slightly lowered its 2018 expectation for average 2018 United States crude output to 10.69 million barrels per day.
US sanctions against Iran, which shipped out nearly three million barrels per day (bpd) of crude in July, officially came into effect at 0401 GMT (12:01am US Eastern time) on Tuesday.
Under the arrangement, Iran's oil payments were deposited into accounts in oil-importing countries and used by Tehran to buy goods. Exports averaged 1.85 million barrels a day last week and have a cumulative daily average for the year of 1.83 million barrels a day, a 140% increase over the year-ago export total.
He noted that: "Anyone doing business with Iran will NOT be doing business with the United States". The sources declined to be identified as they are not authorised to speak to the media. Today's WTI trading range is $67.30 - $71.0. Friday's Baker Hughes crude oil rig count was down slightly from last week, reducing the number of oil rig counts from 861 to 859.
At 7:25 a.m. EDT on Thursday, WTI Crude was trading down 0.12 percent at $66.86, while Brent Crude was up 0.17 percent at $72.40, holding steady after a 3-percent plunge yesterday, when China and the United States traded a new round of tariffs and counter-tariffs on US$16 billion worth of each others' imports, with Chinaslapping tariffs on 333 USA goods, including petroleum products. He added that he expects prices to remain "well-supported" in the near term.
The higher differentials between the two major benchmarks are, the more arbitrage opportunities for traders to pursue.
Currently, the company, as well as other state-owned oil firms, buy crude oil from the U.S. on a spot or current tender basis which comprises one shipload of oil.
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