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Oil prices dip on rising supply, trade tensions

02 November, 2018, 19:09 | Author: Shawna Walton
  • Iran says the US can never prevent it from selling crude oil to international clients stressing that no other supplier can substitute the kind of oil it provides to overseas markets

Oil prices fell more than 1 percent in choppy trading on Tuesday on signs of rising supply and concern that global economic growth and fuel demand would be hit by a deepening of the U.S.

Jahangiri further stated that Tehran expected that the USA would not reduce the country's oil exports to the level of less than one million barrels a day.

"We are determined to implement our policy of maximum pressure on Iran". While ongoing trade tensions between the world's two largest economies stoke concerns over global energy demand, traders continue to watch how much Iranian supply will be taken out of the market when US sanctions hit early next month.

Iran first began to enter into transactions for the sale of oil on the Tehran oil Bourse, which is part of a strategy to counter the USA sanctions that will enter into force on 4 November.

All of the other parties to the 2015 Joint Comprehensive Plan of Action had urged Washington not to unilaterally withdraw from the pact, and close allies in Europe have moved to create an alternative payment system to circumvent sanctions after Trump refused to heed their calls.

Russian Energy Minister Alexander Novak said on Saturday there was no reason for Russia to freeze or cut its oil production levels, noting that there were risks that global oil markets could be facing a deficit.

The plan of supplying crude oil in stock market has frequently been raised in the past years but it doomed to failure. Previously private oil companies could buy oil only to export oil, officials said.

Following US President Donald Trump's decision to quit the historic Iran nuclear deal on May 8, the US vowed to reimpose sanctions lifted under the accord against Iran and inflict punishments like secondary sanctions on nations that have business links with Iran.

High oil prices are hurting consumers and could dent demand, the executive director of the International Energy Agency (IEA) said on Tuesday.

Since most crude oil trading is in USA dollars, a strengthening of the US currency can make the commodity more expensive in other currencies. Saying that the United States won't sell crude oil from the Strategic Petroleum Reserve (SPR), Secretary Perry also noted that he was "comfortable that the world supply can absorb the sanctions that are coming".

Last week, declines were partially attributed to investor concerns about oil production increases following Saudi Arabia's announced ramp-up of output to help cover supply disruptions expected after US sanctions against Iran go into effect by November 5.

Crude oil futures fell Monday as investors reduced exposure, extending weakness that started a week ago amid increased investor caution in anticipation of a possible economic slowdown, an increase in oil production and a stronger dollar that could make oil more expensive in other currencies.

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