Crude Oil Price Analysis: Risk Premiums Unwind as US Mulls Waivers

Marcus Newton
October 9, 2018

CME Group Chairman and CEO Terry Duffy tells FOX Business' Neil Cavuto that US businesses are adapting to current oil prices.

Prince Mohammad told Bloomberg on Friday the kingdom had met its promise to Washington to make up for Iranian oil supplies lost through United States sanctions.

India imported around 10 million barrels of Iranian oil in October, with the November shipment expected to be around 1 million barrels less than this.

A USA government official, who spoke on the grounds of anonymity, said the Trump administration is "in the midst of an internal process" of considering exceptions called SRE waivers, or significant reduction exemptions.

The administration withdrew from a deal over Tehran's nuclear program in May and is unilaterally reimposing sanctions on Iran's crude oil consumers on November 4.

While Brent prices softened on Monday from $86 per barrel and was trading at $83.53 per barrel, traders worldwide are betting on crude oil prices to cross $100 yet again.

Oil prices fell on Monday but pared losses along with the US stock market as investors bet that China's economic stimulus steps on Sunday would be sufficient to boost the world's No. 2 economy and bolster its crude demand.

US Secretary of State Mike Pompeo last month said that on November 4th the sanctions against Iran will be enforced and that the US will consider waivers for countries that bring their Iranian oil purchases down to zero.

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India has a strong trade and diplomatic relationship with both Iran and the US. "Having said that, it may well be that we are already in the most supportive phase coming from this change and the effect will soon begin to ease".

However, a U.S. government official said on Friday that the country could consider exemptions for nations that have already shown efforts to reduce their imports of Iranian oil.

The Islamic Republic exported 1.1 million barrels per day (bpd) of crude in that seven-day period, Refinitiv Eikon data showed.

While Washington has said it wants to cut Iran's oil exports to zero, Iran and Saudi Arabia say that is unlikely.

He said Indian refiners had started importing oil from the United States but purchases were constrained by US infrastructure.

The Trump administration reimposed an initial tranche of economic sanctions on Iran in August, and will implement a second tranche in November. The bulk of spare capacity is held by Saudi Arabia.

But Innes warned that limited spare production to deal with further supply disruptions meant "the capacity is quickly declining due it Asia's insatiable demand".

Other reports by MaliBehiribAe

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