Published: Thu, September 06, 2018
Markets | By Jeffery Armstrong

Rouhani says Iran will export crude oil despite US pressure

Rouhani says Iran will export crude oil despite US pressure

On the impact of the loss of Iranian crude barrels in the market as a result of the USA sanctions, Tchilinguirian said that although an initial supply gap was likely to emerge, given average inventory levels in the OECD, the oil market was expected to resolve the supply gap through higher prices.

Meanwhile, NYMEX WTI prices were trading slightly higher during the Asian morning session ahead of the release of weekly United States crude inventory data, which will be delayed this week by the Labor Day holiday.

Benchmark Brent crude, which traded on Monday, was up 80 cents at $78.95 a barrel, having earlier reached a high of $79.72, its strongest since May. Observed crude flows were the weakest since January.

Considering the fact that the USA is looking to apply sanctions on Iran, third largest oil producer in OPEC, the sentiments of sanctions are keeping the oil supported.

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Buyers have already begun shunning Iranian barrels as the market prepares for the onset of fresh USA sanctions in November.

Edward Bell, analyst at Emirates NBD bank in Dubai, agreed: "Iranian production is already showing signs of decline, falling by 150,000 Bpd last month ..."

The economists said: "The EU, Korea, Japan and UAE collectively accounted for 41 percent of the average 2.6million barrels per day Iran exported in the first half of 2018".

Despite these fears, the global markets don't have much to worry about as they are still fairly well supplied.

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The output in August, propelled by Libya, remains the highest the cartel has achieved this year.

BNP Paribas says, "Crude oil export losses from Iran due to USA sanctions, production decline in Venezuela and episodic outages in Libya are unlikely to be offset entirely by corresponding rises in OPEC production".

Iran rial extended its slide on Wednesday, hitting a record low around 146,000 against the dollar, according to foreign exchange websites. It is due to this high count of oil rigs that the USA has been able to maintain such high production rates. Thanks to the US Labor Day holiday, trading volumes in both US and European crude oil futures were relatively light. -China trade war poses to oil markets. According to a private survey, export orders have dropped down for the fifth straight month.

"It isn't at all clear that such type of economic headwinds will topple oil prices", Innes said.

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As a result, Japanese oil companies are preparing to halt imports of Iranian crude and researching ways to increase imports from elsewhere to make up the shortfall, the reports said.

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