Oil Prices Rise as Iranian Crude Exports Fall

Eileen GuzmanOct 14, 2018

Crude was still heading for its first weekly drop in five weeks, pressured by a big rise in USA inventories and fading concerns for now that looming US sanctions on Iran will cut supplies significantly.

USA crude futures CLc1 were trading down over 1 percent at $74.14 per barrel Wednesday morning, reflecting the declining importance of Gulf of Mexico output that has resulted from the growth of production from the nation's onshore shale fields.

USA crude futures fell 2 cents to $70.95. Brent crude LCOc1 last week reached $86.74, the highest since 2014. OPEC has been under the hit list from the USA for declining the increased outcome to answer rising oil prices.

Speaking of crude oil, recently Iran reported that Saudi Arabia is not replacing Iran's oil export. The IEA said the market looked "adequately supplied for now" and trimmed its forecasts for world oil demand growth this year and next.

Risks to the global financial system have risen over the past six months and could increase sharply if pressures in emerging markets escalate or global trade relations deteriorate further, the International Monetary Fund (IMF) said.

"The U.S. government's tough stance raised the stakes for a more significant Iran export loss than previously foreseen", said Norbert Ruecker, head of macro and commodity research at Swiss bank Julius Baer.

OPEC cut its forecast for growth in non-OPEC oil supply in 2019 by 30,000 bpd to 2.12 million bpd.

Goldman Sachs reckons US shale oil production can continue to increase by 1 million bpd every year until 2021 at the earliest, according to a new report by the investment bank. Financial markets settled down Wednesday following the previous day's big moves when an easing of concerns over an imminent US -led military strike on Syria sent stocks sharply higher and oil prices down.

United States sanction go into place on November 4th.

Almost 40 percent of daily crude oil production was lost from offshore U.S. Gulf of Mexico wells on Tuesday due to platform evacuations and shut-ins ahead of Hurricane Michael.

This was after a 1.3 percent gain earlier in the day.

Pradhan said that Iran was India's second biggest supplier of crude oil after Saudi Arabia till 2010-11 but western sanctions over its suspected nuclear program relegated it to the 7th spot in the subsequent years. As supply conditions continue to tighten, crude oil prices are rallying as a result.

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