Oil trades below $70 as traders assess supply shortage

Oil prices climb as Iran sanctions loom

Oil prices climb as Iran sanctions loom

For instance, the Trump administration reimposed sanctions on Iran last month. An Indian media outlet reports that U.S. has not taken any decision on sanctioning India for importing oil from Iran and investing in the Chabahar port, or buying the S-400 air defence missile system from Russian Federation.

"A bout of profit-taking is pushing the energy complex (down) after two days of stellar gains", said Stephen Brennock, markets analyst at brokerage PVM Oil in London.

US oil exports to Japan and South Korea will rise to record highs this month as Asian refiners take advantage of the steep discounts American sellers are offering after losing Chinese customers amid the trade dispute between Washington and Beijing. "That's why the US-Saudi relationship is key here", said Van der Graaf.

As the November 4 date for imposing sanctions draws nearer, the premium has increased, according to Reuters. Of this, close to 25% comes from Iran.

Looming sanctions against Iran are also supporting prices, Hatsaturjants said.

Washington reimposed some of the financial sanctions from August 6, while those affecting Iran's petroleum sector will come into force from November 4. The Persian Gulf state is the third-biggest producer among Opec members. His plan is to twist Iran's arm by forcing it out of the oil market. The rise in supply is to replace falling exports from Venezuela and Iran.

On the contrary, Anwar Iqbal, Washington based journalist working for Dawn, quoted the same official from State Department, saying that Washington is not offering waiver to any country from curbs on commercial deals with Iran and so far, the restriction applies to India as well.

Meanwhile, U.S. prices could rise because the surge in demand may exacerbate logistical bottlenecks since the current domestic pipeline, port and storage infrastructure is not geared to handle exports on this scale.


If Iran can get its oil to a friendly port, it could be blended with oil from elsewhere and resold, said Thijs Van de Graaf, assistant professor for worldwide politics at the University of Ghent.

All of that is to say that while oil prices fell back at the end of this past week, it does not mean that we are in for another slide.

Outside the United States, traders have been focusing on the impact of US sanctions against Iran that will target oil exports from November.

Still, fears over a supply crunch remained, with Iran's output slumping by 150,000 barrels last month, according to Opec's monthly market report.

Bassam Fattouh and Andreas Economou at the Oxford Institute for Energy Studies wrote in a presentation in early September that they expect a total loss of 900,000 bpd of Iranian oil on the market.

Wells said, "With respect to Chahbahar, we have heard the Indian government's assertion for Chahbahar both as a means of route to Afghanistan, a means for delivering wheat supplies, for instance, and of opening-up trade to Central Asia".

But European firms are highly vulnerable to USA sanctions.

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