Oil rises ahead of renewed U.S. sanctions against Iran

Andrew Cummings
August 9, 2018

Higher production from Russian Federation and members of the Organization of the Petroleum Exporting Countries has put downward pressure on crude oil prices in recent weeks, the agency said. Earlier today, crude oil sold off after it was announced that Saudi Arabia has resumed oil shipments through the Red Sea shipping line of Bab al-Mandeb over the weekend.

Many countries, including United States allies in Europe as well as China and India oppose the sanctions, but the USA government said it wants as many countries as possible to stop buying Iranian oil.

The US, which in May pulled out of a landmark nuclear deal and said sanctions will be re-imposed on Iran within 180 days, has threatened to cut off access to the American banking system for foreign financial institutions that trade with Tehran.

"Past instances of El Nino have resulted in sharp drops in United States residential and commercial heating oil demand and prices", it said.

Markets also anticipated an announcement from Washington later on Monday on renewed USA sanctions against major oil exporter Iran. The contract rose 52 cents to $69.01 on Monday.

Total estimated export volumes on Aframaxes, Suezmaxes and VLCCs from Iranian ports in July fell by 7% to 2.32 million b/d from 2.49 million b/d in June, according to data from S&P Global Platts trade flow software cFlow. Brent crude for October delivery increased by 1.03 percent and steeled at 75.55 dollars per barrel on ICE Futures Europe. "One out of every 10 persons in our country is an Indian and this reflects our close friendship", he added. The global benchmark crude traded at a $6.03 premium to WTI for the same month. The 52-week range on September futures is $47.64 to $72.98.

International Olympic Committee has signed a contract to buy about 6 million barrels of USA crude oil under single tender for delivery in November 2018 to January 2019, he said.

Additionally, last week, energy information provider Genscape issued a report that suggested crude oil stockpiles at the USA storage hub at Cushing, Oklahoma fell in the latest week. If it's confirmed by the EIA data, it would be the twelfth straight week of losses.

Also supporting prices were a weakened dollar, McGillian said.

"While there's still some uncertainty about what will happen to Iranian oil, we think there probably won't be a significant impact on oil prices".

Sanctions on Iran's energy industry do not go back into effect until November, but analysts say the first round of sanctions that snapped back into place on Tuesday illustrated Washington's willingness to follow through on plans to hammer Iran's economy.

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