Two Indian companies to buy Iranian oil in November: Oil minister

Gladys Abbott
October 8, 2018

Trump has been blaming the Organisation of Petroleum Exporting Countries for rising crude prices ever since he decided in May to tear up the nuclear agreement with Iran and re-impose sanctions. Prices are then likely to weaken in the first two quarters of 2019 before strengthening about $4 to $5 a barrel in the second half of the year as the market anticipates a shipping fuel regulation that takes effect in 2020. Saudi Arabia is now pumping about 10.7 million barrels per day (bpd) and can add a further 1.3 million "if the market needs that", he said.

"The recent increase in prices has gone too far, in our view", Barclays said in a note. Petrol is now selling at $1.18 per litre in Kenya, Compared with $1.14 in Uganda, $1.01 in Tanzania and $1.28 in Rwanda.

Global benchmark Brent crude futures for December delivery fell 42 cents to settle at $84.16 a barrel.

"It now appears that only China and Turkey may be willing to risk USA retaliation by transacting with Iran", Jefferies said. Worldwide benchmark Brent crude oil futures were at $83.25 per barrel at 0115 GMT, down 91 cents, or 1.1 percent, from their last close. Prices may hit $100 this fall given the uncertainty over Iran, Russian Energy Minister Alexander Novak told radio station Business FM. Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore, said there was also "chatter that Saudi Arabia has replaced all of Iran's lost oil".

"Near-term spare capacity is effectively maxed out", said Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. The oil price now stands at just over $84.

"On the one hand, we have the shouting of the arrogant powers and politicians of imperialist America.on the other, we have the economic problems of the nation and the tightness of the livelihood of a large portion of the weak people in the country", he remarked. It further added that this is the longest streak of weekly cuts since October previous year. Other investors are betting on the continued rise in prices expecting nearly 1.2 Billion barrels of oil.

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For Kenya, any weakening of its currency would raise product prices, given that they are paid for through importation channels via the USA dollar.

Novak is not alone in predicting prices may return to three-digit levels last seen in 2014.

However, this had increased to $821 million at the end of June this year, The country is also seeing pressure on its cash reserves, burning through $1.17 billion in the past four months.

United States crude exports can not increase rapidly enough to replace Iranian barrels, until the Permian pipeline bottleneck eases in mid-2019. It even gave a figure for how much more the group could pump - 1.4 million barrels a day.

Saudi Arabian Minister of Energy and Industry Khalid Al-Falih said the kingdom is boosting production and would supply refiners. Brent crude had risen from below $82 a barrel in the beginning of the week. Yet the market doesn't seem to care. However, OPEC and its allies have not committed to increasing their supply enough to reduce prices.

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