Published: Fri, November 09, 2018
People | By Leon Thompson

Oil rises to US$73 on report of 2019 output cut talks

Oil rises to US$73 on report of 2019 output cut talks

The sanctions aim to isolate Iran by choking off its main source of revenue - oil exports - and they are enforced through the imposition of penalties on companies that continue to do business with Iran.

According to the data released by the EIA this morning, crude inventories in the USA increased by 5.8 million barrels in the week ended October 2, rising much more than forecasts.

Oil prices slipped yesterday as concerns mounts that an economic slowdown may curb fuel demand growth overshadowed the reintroduction of sanctions on Iran.

Reuters quoted regional director for the Middle East and Africa at the Economist Intelligence Unit Pat Thaker as saying that the United States decision to grant waivers represents a departure, for now, from the stated aim of reducing Iran's oil exports to zero.

Analysts said those countries may be more willing to cut output now that the United States midterm elections are over.

With the granting of the waivers, it's likely that Iran will be able to keep its exports at least around 1.1 million bpd, and possibly even as high as the 2 million bpd of recent months.

Japan's trade minister, Hiroshige Seko, said on Tuesday that Japanese buyers of Iranian oil were expected to resume imports after the country received a waiver from U.S. sanctions.

Italy and Turkey have been importing around 200,000 bpd of oil from Iran over the past two years, with Greece importing less than 100,000 bpd.

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The article also said that the U.S. president "probably always planned to jettison" former USA attorney general Jeff Sessions. Among those expected: Vice-President Mike Pence and former House Speaker Newt Gingrich, an informal adviser to the president.

On October 3, WTI Crude prices hit $76.41, when the market was gripped by fear that much more Iranian oil than initially thought would come off the market due to the US sanctions on Tehran.

US crude production is accelerating, OPEC output is the highest in years and waivers will allow some Iranian crude exports despite USA sanctions. US crude CLc1 rose 58 cents to $62.79.

Japan's refiner JXTG Holdings said on Wednesday it might resume orders of Iranian oil in December. Demand in the biggest markets U.S., China, Europe, and India says Hinds "remains resilient".

Iran late past year inaugurated the port on the Indian Ocean, which is being built largely by India and is expected to provide a key supply route for Afghanistan while allowing India to bypass rival Pakistan to trade with Central Asia and Africa.

The previous sanctions on Iran, imposed by Trump's predecessor Barack Obama, were supported by the UN Security Council and the European Union.

A merchant trader, who also declined to be named, said "enquiries for cargoes from Iran are. coming in from several Asian buyers".

The United States restored sanctions on Iran's energy, banking and shipping industries on Monday.

Brent crude closed at US$72.13 a barrel on Tuesday, down 1.4 per cent from the close on Nov 5, and down 15 per cent from the four-year high of US$84.79 reached on Oct 3.

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