Oil pushes past $80 as Iran fears mount

Lloyd Doyle
September 12, 2018

Oil prices rose more than 2 percent on Tuesday as US sanctions squeezed Iranian crude exports and after USA crude oil production in 2019 was forecast to grow at a slower rate than previously expected, prompting supply concerns.

Saudi Arabia wants oil to stay between $70 and $80 a barrel for now as the world's biggest crude exporter strikes a balance between maximizing revenue and keeping a lid on prices until USA congressional elections in November, OPEC and industry sources have told Reuters.

Oil prices rose more than 2 percent on Tuesday, with Brent crude futures up $1.48 to $78.85 a barrel by 12:36 p.m. EDT (1636 GMT).

Russian energy minister Alexander Novak on Wednesday said, "This is huge uncertainty on the market - how the countries, which buy nearly 2 million barrels per day of Iranian oil will act".

Speaking to BusinessLine, the senior Indian government official confirmed that the U.S-India summit last week discussed India scaling up American oil imports as part of USA measures to cut its trade deficit.

"But we are clear that these are commercial decisions - dependent on how competitively oil is priced and on the requirements of our refineries", the official told BusinessLine. US light crude was 15 cents higher at $67.69.

According to analysts, some of the US grades would be suitable for India's refiners, but they will have to compete commercially with crudes with shorter travel times, so USA oil could serve as spot purchases for Indian companies when the arbitrage works.

Washington is putting pressure on other countries to also cut Iran imports, with close allies like South Korea and Japan, but also India, showing signs of falling in line.

U.S. Energy Secretary Rick Perry met Saudi Energy Minister Khalid al-Falih on Monday in Washington, as the Trump administration encourages big oil-producing countries to keep output high. Perry will meet with Russian Energy Minister Alexander Novak on Thursday in Moscow.

He also warned of the impact of USA sanctions against Iran: "This is a huge uncertainty on the market - how countries, which buy nearly 2 million barrels per day of Iranian oil, will act".

Novak said global oil markets were "fragile" due to geopolitical risks and supply disruptions. Novak did not provide details.

"Iran is increasingly becoming the preoccupation of the crude market".

USA crude oil production in 2018 is expected to grow 1.31 million barrels per day (bpd) to 10.66 million bpd, little changed from EIA's previous forecast.

The NOC has continued to function relatively normally amid chaos in Libya. "Despite the surprising drop in lower 48 oil production and sliding US total petroleum demand, total USA petroleum inventories rose over 10 million barrels".

With Middle East crude markets also tightening, many Asian refiners are seeking alternative supplies, with South Korean and Japanese imports of USA crude hitting a record in September.

At the same time, American oil producers are seeking new buyers for crude they used to sell to China before orders virtually dried up because of the trade disputes between Washington and Beijing.

Other reports by Iphone Fresh

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