Oil prices rise after Saudi output dips, U.S. drilling stalls

Roman Schwartz
August 6, 2018

"It's a jittery feel here, as long as we have Iranian sanctions uncertainty and tariff uncertainty, and it doesn't take much to spark a significant swing one way or the other", said Jim Ritterbusch, an analyst in Galena, Illinois.

Markets also anticipated an announcement from Washington due later on Monday detailing renewed U.S. sanctions against major oil exporter Iran, set to be reinstated at 1201 EDT on Tuesday (1601 GMT), according to a U.S. Treasury official.

US President Donald Trump announced in May Washington's withdrawal from a landmark multinational nuclear deal with Iran.

But Trump, a long-time critic of the deal who succeeded Barack Obama as president previous year, pulled out of the pact despite repeated assurances by United Nations inspectors that Iran is in compliance with its obligations.

The crude market was also roiled by reports that the U.S. has not been able to persuade the world's second-biggest economy to cut Iranian oil imports.

India's crude oil imports from Iran increased by about 30 percent to a record 768,000 barrels per day (bpd) in July, Reuters reported citing tanker arrival data.

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Iranian President Hassan Rouhani has warned the United States against any attempt to stop Tehran's oil trade, threatening to block the strategically important Strait of Hormuz.

Trump's policies are already putting significant pressure on the Iranian economy, although U.S. intelligence suggests they may ultimately rally Iranians against the United States and strengthen Iran's hardline rulers, officials say.

USA officials have softened their stance after initially saying they would press allies in Europe, Asia and the Middle East to adhere to the sanctions and reduce their imports to zero.

"The unilateral sanctions should be abandoned because they are counterproductive", Chinese Foreign Ministry spokesperson Hua Chunying told reporters.

"If China is not participating in that, they are a pretty big consumer of Iranian crude oil that leaves global production at a somewhat higher level", added Haworth.

India's July purchases of Iran's oil were about 85 percent higher in comparison to the shipments of about 415,000 bpd a year earlier, the news agency said. This is causing investors to continue to trim net length, take profits as well as de-risk that position with the sense that oil's upside is limited unless there is material reduction in Iranian barrels.

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