Published: Mon, October 29, 2018
Markets | By Jeffery Armstrong

Oil prices pulled down by global stock market plunge

Oil prices pulled down by global stock market plunge

After many months of concern about shortage of supply ahead of USA sanctions on Iran, due to begin on November 4, the oil market is beginning to be concerned about possible oversupply and inventories that are rising in many parts of the world. The IEA executive director Fatih Birol said this shift was urgent as revenues will fall in the coming years, possibly by 30% by 2030. "That is coinciding with warnings of plateauing, or even declining, production elsewhere in the world".

Meanwhile, exports from two other key oil-producing nations are falling.

Fuel oil supply from Iran is expected to decline to below 1 million mt in October from the usual 1.2 million-1.4 million mt a month, ahead of the USA sanctions in November, market sources said this week.

Oil tumbled for a third straight week as crumbling equity markets across the globe stoked concern about a slowdown in energy demand growth. Faltering confidence in the strength of the global economy comes as swelling American oil stockpiles spark fears about a re-emergence of a price-killing glut.

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The sharp crude oil price drop caused Saudi Arabia to think twice about raising oil output.

Saudi Arabia, who is a powerful influencer of oil price and supply, faces worldwide pressure after the suspected murder of Washington Post columnist Jamal Khashoggi at the Saudi embassy in Istanbul at the start of October.

Financial markets have been roiled by the U.S. The rising demand means this is no longer the case.

There are so far no signs of any actual supply squeeze and some believe that without the current geopolitical uncertainties, oil prices would still be stable. He attended Daley College in Chicago before beginning his career on the trading floor of the Chicago Mercantile Exchange which eventually led him and his team to The PRICE Futures Group.

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Kardor said the Ministry of Petroleum and the National Iranian Oil Company (NIOC) are fully determined to supply Iranian oil in the Bourse based on schedule.

For the U.S.to pursue both Iran sanctions and toughening trade policy at the same time "is a really big risk", said Philip Verleger, an energy economist.

The crude oil market is still fragile due to limited spare capacity so any supply disruption is likely to trigger a spike to the upside in prices.

In the months following the full implementation of sanctions in November, the total volumes of crude oil and condensate coming off the market will become more apparent.

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