Iran Resumes Storing Oil In Tankers As US Sanctions Approach

Iran Resumes Storing Oil In Tankers As US Sanctions Approach

U.S. West Texas Intermediate (WTI) crude settled US$1.71, or 2.5 percent, higher at US$69.25 a barrel.

Oil prices briefly touched $80 a barrel yesterday for the first time since May after American stockpiles fell by more than expected and concerns rose about both the effects that USA sanctions on global supplies and about a hurricane heading towards the east coast of the United States.

Since spring when the President Donald Trump administration said it would impose sanctions on Iran, crude traders have priced in a risk premium reflecting the supply shortages that may occur when exports from the third-largest OPEC member are cut.

"Things are tightening up", the agency said in its monthly report, but added: "As we move into 2019, a possible risk to our forecast lies in some key emerging economies, partly due to currency depreciations versus the USA dollar raising the cost of imported energy".

Brent crude futures traded at $79.20 a barrel while US crude futures rose 61 cents to $69.86 a barrel.

"The path of least resistance for oil prices, given the supply fundamentals, remains up", Harry Tchilinguirian, oil strategist at BNP Paribas, told Reuters Global Oil Forum.

South Korea has made a decision to comply with US demands to cut oil imports from Iran to zero, becoming the first to do so out of the top three buyers.

But the United States government does not want to push up oil prices, which could depress economic activity or even trigger a slowdown in global growth.

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With Middle East crude markets tightening because of the USA sanctions against Iran, many Asian refiners are seeking alternative supplies, with South Korean imports of U.S. crude likely hitting a record in November.

Perry will also meet with Russian Energy Minister Alexander Novak on Thursday in Moscow.

"This is a huge uncertainty on the market - how countries, which buy nearly 2 million barrels per day of Iranian oil, will act".

Combined output by these three producers has risen by 3.8 million bpd since September 2014, more than the peak 3 million bpd Iran has managed during the last three years.

The Russian Energy Minister, Alexander Novak, said on Tuesday that Russia and a group of producers around the Middle East, which dominate OPEC, might sign a new long-term cooperation deal at the beginning of December, the TASS news agency reported. Novak did not provide details.

Brent crude futures have made a firm breach of the descending trendline which has curbed price action previous.

At the same time, American oil producers are seeking new buyers for crude they used to sell to China before orders virtually dried up because of the trade disputes between Washington and Beijing.

Chinese media Xinhua said the U.S. Energy Information Administration (EIA) forecast on Tuesday that U.S. crude oil production will average 10.7 million bpd in 2018, up from 9.4 million barrels bpd in 2017, and will average 11.5 million barrels bpd in 2019.

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