Oil Prices: November 4 Iran Sanctions Nearing

Oil Prices: November 4 Iran Sanctions Nearing

Oil Prices: November 4 Iran Sanctions Nearing

U.S. West Texas Intermediate crude ended Thursday's trading session down $1.62, or 2.5%, at a almost seven-month low of $63.69 per barrel, Kallanish Energy reports.

Prices of Brent crude oil futures were quoted 0.10% lower at $72.79 during the London noon Friday, and are now up by 8.85% for 2018.

The U.S. government has agreed to let eight countries, including South Korea and Japan, as well as India, keep buying Iranian oil after it reimposes the sanctions, Bloomberg reported on Friday, citing a U.S. official.

WTI-Cushing spot prices averaged about 68 dollars per barrel in August, down from the July average of 71 dollars per barrel.

In that year it pumped 70 percent of the amount produced by OPEC's biggest producer, its regional political rival Saudi Arabia, and more than three times as much as its neighbour Iraq.

Oil headed for the biggest weekly loss since February as the USA softened its crackdown on Iranian exports and American supplies surged, assuaging fears of an impending shortage. WTI lost 2.93 USA dollars to settle at 66.43 dollars a barrel, and Brent sank 3.39 dollars to 76.44 dollars per barrel. "But rising production from Saudi Arabia and others, coupled with a global equity rout and concerns over economic outlook, is weighing on prices", Jun Inoue, a senior economist at Mizuho Research Institute Ltd., said by phone from Tokyo.

"Given these [output] numbers, with Russian Federation pumping hard and the U.S. and Opec as well, and we are not really seeing a pick-up in demand for another month.it could indicate we're back to the good old $70 to $80 range that persisted throughout April and August", Saxo Bank senior manager Ole Hansen said.

USA crude oil production has increased significantly during the past ten years, driven mainly by production from tight oil formations using horizontal drilling and hydraulic fracturing.

Oil prices gained after the U.S. Energy Information Administration said crude inventories rose 3.2 million barrels last week, less than expected. Gasoline inventories decreased by 3.5 million barrels and distillate stockpiles dropped by about 3.1 million barrels.

The waivers are only temporary and the United States will expect the countries that get them to gradually reduce oil imports from Iran in the months ahead, according to reports quoting U.S. administration officials. Analysts also believe that the surge in output has resulted in Contango scenario which implies that prices for future delivery are higher than for immediate dispatch resulting in traders stocking up on oil for later sale in trading market resulting in traders and investors increasing their positions for short term.

However, the effects of the US withdrawal from the Joint Comprehensive Plan of Action (JCPOA) in May, the resumption of Iran sanctions and the potential response from other countries pose significant uncertainty to the forecast.

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