Oil prices fall on rising supply, trade tensions

Anna Jefferson
November 2, 2018

On Tuesday, U.S. oil prices further dived 4.22 percent as Saudi Arabia vowed to enhance oil production and U.S. stock markets sank on disappointing earnings reports.

Moreover, Saudi Arabia's Energy Minister Khalid al-Falih said on Tuesday that the Organization of the Petroleum Exporting Countries (OPEC) and its partners are in "produce as much as you can" mode.

EIA forecast that US crude oil production to increase by 1 million barrels per day in 2019. One is led by National Security Adviser John Bolton, who wants the toughest possible approach, and another by State Department officials keen to balance sanctions against preventing an oil price spike that could damage the USA and its allies.

He further said supply of one million barrels of oil at the trade floor of IRENEX would continue with the current trend, and changes could be made if needed in future supplies.

US President Donald Trump pulled out of the Iran nuclear deal formally known as Joint Comprehensive Plan of Action in May this year.

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The sanctions have triggered a black-market fueled by Iranian tankers - or "ghost ships" - that dismantle their vessel tracking systems, according to regional observers, making it extremely hard to estimate how much Iranian oil is on the market at any given moment.

He added that all of those barrels would be bound for exports.

Oil prices dipped on Tuesday, dragged down by concerns that the Sino-U.S. trade dispute will dent economic growth and by signs of rising global supply despite upcoming sanctions against Iran.

However, U.S. equities rebounded strongly on Thursday, with the Nasdaq Composite Index jumping about 3 percent in late trading, soothing anxious investors to some extent.

In this regard, NIOC released an announcement on Saturday, saying, "banks of Pasargad, Tejarat, Tose-e Saderat Iran, Sepah, Saderat, Mellat, Melli and Parsian are qualified to issue guarantees for crude oil trades in the stock market". WTI picked up 0.26 dollar to settle at 67.59 dollars a barrel. However, oil futures lost about 2.4% in the week, settling lower for a second straight week.

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"What is happening today is a lie that USA policymakers are telling the people of the world and the Americans that Iran's oil supplies should be replaced by Saudi Arabia so that oil prices would not rise", he said.

The second round of USA sanctions reimposed by president Donald Trump in May kick in on November 4. Earlier, private refining companies could only buy crude oil for exports of oil products, officials have said.

Jahangiri further emphasized that the United States efforts to encourage Saudi Arabia to replace Iran's oil in markets were in vain, stressing that oil prices would nonetheless rise if Iranian supplies were to be cut off.

Meanwhile, the market will focus on the news of any meeting between officials from China and the United States aiming at seeking solution to the ongoing trade tensions.

Because of the concern over oil prices, a source recently told Reuters, the administration is considering limited waivers for some Iranian customers until Russian Federation and Saudi Arabia add additional supply next year, while limiting what Tehran can do with the proceeds in the meantime.

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