Resumption of Iran sanctions increases uncertainty in crude oil

Marcus Newton
October 29, 2018

Futures in NY slipped as much as 1.2 percent, on course for a third weekly drop of over 3 percent.

US President Donald Trumps' Iran sanctions will apply from November 5 and in its wake it is highly likely that crude oil which has receded to lower levels will again trade higher at levels of $85 per barrel. In recent weeks, the oil market has carefully watched growing strains in the U.S. -Saudi relationship over the killing of Saudi journalist Jamal Khashoggi. Great earnings from oil companies like ConocoPhillips don't matter after Amazon misses, rising fears about a global economic slowdown.

Touching upon the importance of oil market stability for the US, senior energy expert Omid Shokri says it is not easy to drive Iran's oil export to zero in short term.

Falih added, however, that there is no guarantee oil prices would not go higher in the face of new sanctions. I think USA and Saudi due to mutual interest are interested to manage any tension with aimed of decreasing Iran's role in world oil market.

Bowing to pressure from Washington, China's oil-majors Sinopec and China National Petroleum Corp (CNPC) have not ordered any oil from Iran for November because of concerns that violating sanctions could impact their global operations.

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The move comes as part of a plan to facilitate Iran's oil exports as United States sanctions targeting its energy sector in November draw nearer. The US light crude was dropped by $3.03, by 4.4% at $66.33 per barrel, after hitting the lowest $65.74 from two months.

In oil, WTI has fallen almost 10 percent so far this month, while Brent is down almost 9 percent.

However, a global collapse in equities has roiled oil markets this week.

USA crude production is soaring, boosted by technological advances. He attended Daley College in Chicago before beginning his career on the trading floor of the Chicago Mercantile Exchange which eventually led him and his team to The PRICE Futures Group. Cumulatively the value of oil imports from Iran between April and September 2018 more than doubled to Dollars 7.74 billion from USD 3.84 billion in the corresponding period a year ago.

According to Reuters, Saudi OPEC governor Adeeb Al-Aama said the oil market could shift into oversupply in the last quarter of the year and that OPEC may have to return to oil production cuts. India expects to fill the shortage created by nixing Iranian imports through an increased supply of crude oil from Arab countries.

Other reports by MaliBehiribAe

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