India To Continue Iranian Oil Imports In November Despite U.S. Sanctions

India To Continue Iranian Oil Imports In November Despite U.S. Sanctions

Crude was still heading for its first weekly drop in five weeks, pressured by a big rise in USA inventories and fading concerns for now that looming US sanctions on Iran will cut supplies significantly.

Still, oil traders generally agreed that the Iran sanctions are hitting harder than expected, with Jeremy Weir, chief executive officer of Trafigura Group Pte. forecasting 2 million barrels per day (bpd) lost to the market and Vitol and Gunvor Group pegging the volume closer to 1 million bpd.

As Wednesday saw crude prices drop dramatically due to sudden concerns about oversupply and waning demand, it was unsurprising that some experts would warn of "extreme volatility" for prices due to the USA sanctions against Iran.

Total oil demand for the year is now pegged at 98.79 mb/d. Brent crude reached a four-year high of $86.74.

News that oil exports from Iran are already falling also put upward pressure on prices. Some market experts say India is willing to keep buying oil from Iran because Tehran offers some discounts and incentives.

The cartel cut its estimate for global demand for its crude next year due to weakening economic growth and higher output from rivals, notably US shale drillers.

Moreover, presently, the Indian federal government is struggling with higher oil prices and a weakening Rupee (domestic currency) against the US currency that also weighs on its oil import bill.

"Oil prices have stabilized for the moment - between a real and a metaphorical storm", said Fiona Cincotta, senior market analyst at City Index.

Oil prices fell on Tuesday [October 10, 2018] following the IMF's downward review of the global economic growth forecasts.

OPEC in its monthly report, said world oil demand would increase by 1.36 million barrels per day (bpd) next year, marking a decline of 50,000 bpd from its previous estimate.

The cartel said OPEC production in September, as reported by secondary sources, rose month over month by 132,000 barrels a day to a daily average of 32.76 million barrels.

Oil headed for the biggest 2-day drop since July, with fuels from diesel to gasoline also declining as fears over a worsening trade war rattled markets across the board.

Jeremy Weir, chief executive of Trafigura, said at the Oil & Money conference in London that he would not be surprised to see oil trade at more than $100 per barrel next year.

Saudi Arabia, the de facto leader of OPEC, is the only oil producer with significant spare capacity on hand to supply the market if needed.

Crude stocks at the Cushing, Oklahoma, delivery hub rose by 2.2 million barrels, API said.

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