Oil prices edge up as investors eye tight market

Andrew Cummings
July 11, 2018

Mentioning U.S. president Trump's recent tweets, Zanganeh noted that such actions will result in chaos in the oil market and push the prices further up.

Trump recently said that Saudi Arabia had agreed to increase oil production by up to 2 million barrels per day (bpd) to moderate high prices.

Trump's order for oil producing countries to raise output "is very insulting to the people of these countries and would undermine their national sovereignty and destabilize the oil market", he said.

Surging prices led Trump to take to Twitter on July 4, accusing OPEC of "doing little to help" and urging the group to "REDUCE PRICING NOW!"

Asian refiners are seeking alternatives to Iranian oil from Saudi Arabia, Kuwait, the United Arab Emirates and Iraq after the United States pledged to renew sanctions on Iran, Kuwait Petroleum Corp (KPC) Chief Executive Officer Nizar al-Adsani told Reuters.

Last month, OPEC and Russian Federation agreed to boost production by a million barrels daily to reduce prices that had gotten uncomfortably high for the biggest importers.

The move came as Iran - an OPEC member - faces renewed sanctions over Trump's decision to quit the global nuclear deal with Tehran, which has added to supply concerns on world markets.

Zanganeh said Iran's stance on this issue was clear.

Saudi Arabia's total supplies to the market in June were even higher than well-head production, the sources said, suggesting the Kingdom sold crude from storage.

European powers which still support the nuclear deal say they will do more to encourage their businesses to remain engaged with Iran - though a number of firms have already said they plan to pull out.

This has had traders anxious that the market is in for a shortage, which will cause prices to jump even higher, with some forecasting Brent at over US$100 a barrel.

Iran, OPEC's third-largest producer, is facing USA sanctions on its oil exports that are prompting some buyers to cut purchases.

The move is part of Trump's withdrawal from the Iran nuclear deal, which previously eased economic penalties on the country as long as it curbed its nuclear weapons program.

The purchase was partly to compensate for a decline in Venezuelan heavy grade Merey, said one of the officials.

Now, President Trump is threatening sanctions against any country that continues to do business with Iran.

South Korea has bought almost 296,000 barrels of oil from Iran in the first five months of the year, and is the biggest buyer of Iranian oil after China and India.

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