Saudi reassures on oil supply, says will meet demand

Marcus Newton
October 25, 2018

"We are going through a crisis", the minister added. A sharp increase in inventories mean that the price of crude may continue to decline.

Two of the sources said Kunlun's moves to suspend euro settlement in August and yuan starting next month were triggered by USA sanctions. "We do not know if we will get waiver (from USA sanctions) or not", he said speaking at an energy sector event here.

Uncertainty over future Iranian exports remains high.

The new round of US sanctions aims to force Tehran to stop its involvement in regional conflicts in Syria, Yemen and Iraq and halt its ballistic missile programme after President Donald Trump abandoned a 2015 deal between Iran and six world powers aimed at curbing Tehran's nuclear plans. Crude has retreated in recent weeks after reaching a four-year high early this month as fears over demand persist. Around 10-12 per cent of these shipments are sourced from Iran.

US Treasury Secretary Steven Mnuchin on Sunday dismissed concerns that oil prices could rise, saying the market had already factored in the loss of Iranian oil.

In a related development, Iran oil minister has reversed his decision to transfer ownership of nine state-owned oil companies from ministry to the newly formed NOC which would enable the incoming government of Prime Minister-designate Adel Abdul Mahdi to make its own decisions in the oil sector. The reassurances seem to have worked, with oil markets more focused on American crude stockpiles than the potential fraying of the U.S. -Saudi relationship. That trend has continued in the first six months of the current fiscal.

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From Nigeria, India's crude oil imports dropped 6.36 per cent to 1.03 MT in September.

U.S. has been significantly increasing its crude oil production and exports since 2016 amid increase in crude oil prices and tightening of supply market.

Both China and Russian Federation as well as other countries are expected to continue purchasing Iranian oil, and U.S. officials worry that Moscow will help Tehran evade sanctions. It has continuously warned OPEC members against increasing production unilaterally.

Top U.S. lawmakers turned their ire on Saudi Crown Prince Mohammed bin Salman on Sunday and said they believed he ordered the killing of Khashoggi, although the administration of U.S. President Donald Trump maintained a more cautious stance. "That policy has been consistent for many years", Falih said. Meanwhile, supplies at Cushing likely increased 1.5 million barrels last week, according to a forecast compiled by Bloomberg. Add to that higher Russian production, a return of Libyan output, and the market is finding healthy supply just at a time when demand is waning.

Data from API showed crude inventories rose 9.9 million barrels last week to 418.4 million, compared with analysts' expectations for an increase of 3.7 million barrels. Iran is the third-largest producer in the Organization of the Petroleum Exporting Countries and China is the biggest buyer of its oil.

Crude inventories rose by 6.3 million barrels in the week to October 19, compared with analyst expectations for an increase of 3.7 million barrels.

Other reports by MaliBehiribAe

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