U.S. crude oil inventories increase last week: API

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The Trump administration pushed governments to reduce Iranian oil imports to zero with related sanctions.

"Crude oil imports rose ... as uncertainty around tariffs on US imports and sanctions on Iran eased", said ANZ bank following the data release.

Prices were down significantly on Tuesday as the Iranian sanction waivers granted by the United States to eight countries-including oil-hungry India and China-took the sting out of what could have been market panic given the re-imposition of sanctions on Monday.

The US State Department has warned nations, allowing Iran's shipping vessels into their territorial waters and ports, of potential risks connected to insurance liabilities amid the recently introduced sanctions. The first would be that Mr Trump and his administration effectively blinked first in their dispute with Iran over its nuclear and missile programmes. Of course, it is unclear how long the less-hawkish USA stand on Iran will continue.

Moreover, Trump's sanctions against Iran's financial sector essentially make 30 banks and their subsidiaries off-limits to foreign lenders, undermining its means to facilitate trade. But perhaps with an eye on the mid-term USA elections on Tuesday, he made it clear that keeping crude prices low was also a priority. In hopes of mitigating the immediate economic hit, Iranian authorities have hinted that Tehran might have to sell its oil at a discount to entice buyers going forward.

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Brent crude LCOc1 had dropped from a four-year high in October above 86 dollars a barrel to 71 dollars on Tuesday.

"The U.S. has for now given a lifeline to Iran", said Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland.

According to the data released by the EIA this morning, crude inventories in the US increased by 5.8 million barrels in the week ended October 2, rising much more than forecasts. Prices are also on course for a fifth weekly drop, down 2.9 percent.

As a result of pre-sanctions pressure by Washington, Iran's oil exports in November may not exceed 1 million to 1.5 million bpd, according to industry estimates. Demand in the biggest markets U.S., China, Europe, and India says Hinds "remains resilient". In turn, the United States would give a waiver to India to continue the import of Iranian oil in progressively lesser quantities for six months. In June, the producer group chose to relax output curbs in place since 2017, after pressure from US President Donald Trump.

"Crude prices are rising". Will there be any genuine attempts to find common ground with Teheran on 2015 deal reached together with other Western powers to limit Iran's nuclear programme? "I did it a little bit because they really asked for some help, but I really did it because I don't want to drive oil prices up to $100 a barrel or $150 a barrel, because I'm driving them down".

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