Published: Sat, July 21, 2018
Money | By Hannah Jacobs

US Unlikely to Get Tough on Iran before November

US Unlikely to Get Tough on Iran before November

Crude prices fell from session highs reached after Saudi Arabia's OPEC Governor Adeeb Al-Aama statement that the kingdom expects crude exports to drop by roughly 100,000 bpd in August as it limits excess production.

Both Brent crude and United States benchmark West Texas Intermediate fell more than four per cent Monday, with the former hitting three-month lows of below $72 a barrel.

At 0915 GMT, September WTI crude oil futures are trading $68.30, up $0.06 or +0.10% and September Brent crude oil is at $73.08, up $0.50 or +0.69%.

In fact, Russian Federation and Saudi Arabia have both started to increase their crude oil production, even before the OPEC+ meeting on June 22.

The JCPOA allowed foreign money to flow into Iran in exchange for oil exports and other trade, but the Iranian people saw none of this.

But the spectre of oversupply quickly returned, with a rise of more than 600,000 barrels in USA crude stockpiles, reported by the American Petroleum Institute late on Tuesday.

The commodity has fallen this month in wake of escalating US-China trade tensions and mounting concerns about renewed oversupply.

"It's going to be a real tug of war: the higher price of diesel versus a weakening gasoline market", Zachary Rogers, a refining analyst at Wood Mackenzie, said.

Futures in NY were little changed on Thursday after rebounding 1% in the previous session from a 1.5% drop.

"Refinery utilization rates in the USA have been kept at nearly full capacity and it will gradually fall with planned maintenance, which will lead to a build-up in overall crude stockpiles, while gasoline and distillate inventories shrink", Lim Jaekyun, a commodities analyst at KB Securities, said by phone in Seoul. It looks as if the $2.75 dollars level is going to offer short-term supply, but even if we break above there I think the $2.80 level is also going to offer problems. US West Texas Intermediate (WTI) was $1.11 higher at $69.89. Total commercial petroleum inventories increased by 6.0 million barrels last week.

"Japanese oil refiners have been making preparations for lifting plans on the assumption that US sanctions are to be applied", the president of the Petroleum Association of Japan (PAJ), Takashi Tsukioka, said.

Speculation that US President Donald Trump could seek increased production from oil cartel OPEC and tap into the Strategic Petroleum Reserves to push down gasoline prices, sent oil plummeting. USA crude stocks rose by 5.8 million barrels last week, compared with a forecast for a decline of 3.6 million barrels. Nonetheless, the jump in crude inventories may suggest that United States production is able to keep up with strong demand.

Since January 2017, OPEC and non-OPEC countries did manage to bring back supplies to 5-year averages having cut production by about 1.8 million barrels a day, and in the process helping lift prices to a three-year high of more than $80 a barrel in May.

Adeeb al-Aama said in a statement on Thursday that the kingdom's July crude oil exports will be roughly in line with last month's total, which stood at almost 500,000 barrels per day (bpd).

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