Trump Administration Examines Path to Waive Iranian Oil Sanctions

Global benchmark Brent crude traded at around $83.38 on Monday, down almost 1 percent, while U.S. West Texas Intermediate (WTI) stood at around $73.81, around 0.7 percent lower.

"Chatter that Saudi Arabia has replaced all of Iran's lost oil" is weighing on prices, said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.

Trump administration officials told the Free Beacon in June they are "not granting waivers" to some countries importing Iranian oil, but walked that statement back late Monday when a US official disclosed it is now actively working to grant "individual countries" waivers from the new oil sanctions.

With US sanctions on Iran looming, Moody's Investors Service had estimated a $500 million decline in earnings for Indian state-owned refiners, IOC, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) on account of substituting crude oil imports from the Persian Gulf country. Brent hit a four-year high of $86.74 last week.

Oil has been supported by concern that the Iranian export loss will leave a thinner margin of unused production capacity to deal with supply shocks.

The supply picture right now is currently looking worrisome, with Venezuela and Iran supporting to drive prices higher.

The Indian Oil Corporation and Mangalore Refinery and Petrochemicals have ordered a total 1.25 million tonnes of crude.

Last week, India reduced gasoline and diesel prices to give relief to consumers against rising global crude prices caused by uncertainty over United States sanctions on Iran and OPEC's decision to raise output.

Iranian crude exports, which reached a peak of some 2.5 million barrels after sanctions were lifted in 2016, have plunged by over 500,000 barrels a day and are expected to dive further when expanded sanctions on oil take effect next month.

"There is growing concern that suppliers such as Saudi Arabia and Russian Federation will struggle to compensate for potential production declines from Iran and Venezuela, which has supported oil prices in today's trading session", said Abhishek Kumar, senior energy analyst at Interfax Energy in London.

In the previous round of USA sanctions on Iran from 2012 to 2015, India continued to purchase Iran's oil although it was forced to dramatically reduce its purchases to protect its wider exposure to the us financial system.

Oil prices have extended a rally on expectations the sanctions will test the Organization of the Petroleum Exporting Countries and other producers.

Singh said International Olympic Committee is importing the "usual" monthly volumes of oil from Iran.

In the United States, almost 40 percent of daily crude oil production was lost from offshore U.S. Gulf of Mexico wells on Tuesday because of platform evacuations and shut-ins ahead of Hurricane Michael.

If current forecasts prove accurate, the hurricane would largely miss major producing assets in the Gulf, analysts said, but any change of track could widen the impact.