Crude oil sells at $78.24 as output peaks

Gladys Abbott
September 6, 2018

According to reports by Japanese news media Jiji Press agency and Kyodo on September 3rd, the country's major oil wholesalers are preparing to suspend Iranian crude imports next month in response to USA sanctions against Tehran and threats to companies doing business with Iran.

"Iranian production is already showing signs of decline, falling by 150,000 bpd last month".

"Prices yesterday rose in anticipation that the storm could inflict some damage on the production and refining sector, but after all was said and done we lost a little bit of production and the refineries in MS and Louisiana continued to run as Gordon made landfall", said Andrew Lipow, president of Lipow Oil Associates. The shift comes as Iran's oil exports are shrinking, with key buyers in Asia taking fewer cargoes weeks before US-imposed sanctions take full effect.

The economists said: "The EU, Korea, Japan and UAE collectively accounted for 41 percent of the average 2.6million barrels per day Iran exported in the first half of 2018".

As oil markets show growing global supply concern, Iraq is signaling the jitters may be overdone.

The output in August, propelled by Libya, remains the highest the cartel has achieved this year.

The country pumped 4.64 million barrels a day in August, beating the previous high set two years ago, while exports matched peak levels from 2016, according to a Bloomberg survey and tanker-tracking data.

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"Crude oil export losses from Iran due to US sanctions, production decline in Venezuela and episodic outages in Libya are unlikely to be offset entirely by corresponding rises in OPEC+ production", Tchilinguirian said.

For the first time in 3 weeks, 2 new oil rigs were added to U.S. oil production operations, taking the count of active oil rigs to 862.

The ongoing trade wars between the United States and some of the world's biggest economies, including the European Union and China, could hurt the demand for oil if they aren't settled soon.

Bahrain and Oman's oil and gas ministers both told CNBC Monday that China's demand for oil could decline on the back of its trade dispute with the US that has seen tariffs imposed on a wide range of Chinese imports.

Speaking of crude oil, it's consolidating in a tight range of $69.30 - $70.30.

The latest leg lower in the black gold is mainly driven by increased safe-haven demand for the US currency, as the US-Sino trade tensions escalated amid expectations that the US President Trump would hit China with more tariffs on their imports.

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