Oil prices rise as focus returns to supply concerns

Ann Santiago
September 18, 2018

But curiously, the news wasn't cited as a factor in prices pulling back on Friday; instead, US president Donald Trump reportedly instructing aides to proceed with tariffs on about $200 billion more of Chinese products plus ongoing worries about the sanctions against Iran resulted in a mixed trading day, with West Texas Intermediate settling up 40 cents at $68.99 per barrel, and Brent dropping 5 cents per barrel to $78.12.

In theory Saudi Arabia could immediately raise output to 11.5 million barrels a day-that's what Crown Prince Mohammed bin Salman told Bloomberg in April 2016.

"Any country will naturally try to sell its oil at the highest rate possible to increase its own revenues", said the Iranian official, who added, "Nevertheless, the behavior of Saudi Arabia and Russian Federation in dealing with Iran in terms of their oil production will be recorded in history and the future generations will realize that ... both of these countries chose to welcome the sanctioning of an OPEC producer".

The United States is renewing sanctions on Iran after withdrawing from a nuclear deal forged in 2015 between Tehran and world powers.

Brent crude LCOc1 however pulled back on the reports of additional tariffs, dropping 5 cents a barrel to $78.12 by 1:03 p.m. EDT.

In May, US President Donald Trump pulled out of an worldwide nuclear deal with Iran, OPEC's third-biggest producer, and announced the imposition of sanctions. "We've made it clear that unless we act as a global community, Iran's behaviour is not going to change", Singh said.

IRAN faces a potentially crushing loss of oil exports when United States sanctions return in November, but the impact could be blunted by its experience of working around embargoes.

The sanctions would include targeting Iran's automotive sector, trade in gold, and other key metals.

While oil prices strengthened in recent weeks on the lower supply outlook out of Iran, investors should keep in mind that OPEC can step in at anytime to fill in the gap.

According to preliminary estimates from the US Energy Information Administration (EIA), crude oil production in the US exceeded that of Saudi Arabia in February for the first time in more than two decades.

The group said OPEC has another 2.7 million barrels a day of spare production that it could tap, 60 per cent of it in Saudi Arabia. U.S. light crude oil prices fell by more than a $1 down to $69.22 a barrel.

Organization of the Petroleum Exporting Countries (OPEC) monthly report released on Thursday showed Iran's oil production fell by 150,000 bpd in August, despite OPEC's monthly oil production rising 278 million bpd to reach 32.6 million bpd.

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