Examining Details of US Exemptions on Buying Iranian Crude Oil: MEA

Secretary Jeremy Hunt

Secretary Jeremy Hunt

Oil prices spiked in early October on fears that USA sanctions on Iran would thin out global petroleum supplies.

U.S. West Texas Intermediate (WTI) crude futures were at $61.76 per barrel, down 45 cents, or 0.7 per cent, from their last settlement.

Front-month Brent crude oil futures LCOc1 were at $71.83 per barrel at 0750 GMT, down 30 cents, or 0.4 percent, from their last close.

The slump in oil markets has been exacerbated by a USA decision to allow eight countries to continue importing from Iran even after the United States hits the Opec member with sanctions.

The short-term mood among traders was described by Phil Flynn, senior market analyst at Price Futures Group, as "negative", and it is likely to stay that way on the strength of reports from the Organization of the Petroleum Exporting Countries (OPEC) and other sources that global demand is slowing and the oil market could swing back into surplus next year, regardless of the impact of the USA sanctions on Iran.

"A slowdown in the global economy remains the key downside risk to oil", Bernstein said.

And India, which is Iran's second largest customer, is expected to continue importing around 300,000 barrels per day, representing up to two-thirds of what it buys on an average daily basis.

Knife-wielding attacker goes on rampage in Melbourne
Just after 5.20pm (local time), a body was seen lying under a white sheet on Bourke Street, near the entrance to Russell Place. The other two are into the hospital including one suffering from a neck injury and is suspected to be in critical condition.

The decline in prices over the past weeks follows a rally between August and October when crude rose ahead of the re-introduction of sanctions against Iran's oil exports on November 5. The previous daily record of 9.6 million bpd was touched in April 2018. "Six months from now, the USA will be producing more crude oil than the unverified sustainable production capacity of Saudi Arabia".

In the US, crude production increased to 11.6 million barrels per day last week, the highest level on record, according to Energy Information Administration data. On Wednesday, oil slipped after USA crude output hit another record and domestic inventories rose more than expected.

Oil prices also fell on an abundance of oil stored in the United States.

Iraq, the second-largest producer within the Organization of the Petroleum Exporting Countries (OPEC) behind Saudi Arabia, is targeting production capacity of 5 million bpd in 2019, up from 4.6 million bpd now, Oil Minister Thamer Ghadhban said on Tuesday.

Both Brent and WTI have fallen by around 20 percent from the four-year highs they reached in early October.

Meanwhile, the world's top three producers, the United States, Russia and Saudi Arabia are also pumping at or near records.

Meanwhile, Opec's production in October reached the highest level since 2016, and Russian Federation hiked its output last month to a post-Soviet record of 11.4 million barrels a day. "OPEC and Russian Federation may use cuts to support $70 per barrel", said Ole Hansen, head of commodity strategy at Saxo Bank.

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