Oil in Global Economy Series: Russia's oil production at record high

Oil in Global Economy Series: Russia's oil production at record high

Oil in Global Economy Series: Russia's oil production at record high

The risk of declining Chinese demand for oil is worrying Middle East officials more than Iran's supply curbs as a result of USA sanctions.

US crude oil hasn't traded at $95 a barrel in since 2014, but this is the year that could change.

On Friday, WTI crude oil settled at $69.80 a barrel while ICE Brent crude closed at $77.42. "We're heading into these Iran sanctions, which is going to remove supply", said Ashley Petersen, lead oil analyst at Stratas Advisors in NY. Still, many Asian importers are continuing to plan for Iranian oil purchases despite the US sanctions.

In 2017, 56 percent of China's crude oil imports came from countries within OPEC, a decline from a peak of 67 percent in 2012 but still making it a significant market for OPEC and its Middle East members.

Jiji Press said it appeared Japan will be unsuccessful in its efforts to get a waiver from Washington that would allow it to continue importing oil from Iran.

Many worldwide shippers have stopped loading Iranian oil as US financial sanctions against Tehran prevents them from insuring its cargoes. With concerns growing that global spare capacity will be stretched if other producers such as Saudi Arabia pump more to make up for the loss, the oil market is revealing risks of a crunch.

In August, Iran's oil minister said that French oil-and-natural-gas company Total had "officially left" Iran in the face of the USA threats.

South Africa stumbles into a recession
The rand stretched losses against the dollar to more than 2 percent and government bonds fell after the data was released. Growth was dragged lower by five of the ten sectors of the economy, underscoring just how broad-based the weakness is.

At the start of the week after the long USA holiday week-end, crude oil was already being underpinned by supply issues after global markets had tightened throughout the month of August.

Output was boosted by a recovery in Libyan production and as Iraq's southern exports hit a record high.

FGE estimates Iran's exports will slump to below 1 million barrels a day by mid-2019, while industry consultant Energy Aspects Ltd. expects a plunge of 1.5 to 1.7 million in daily shipments by the end of this year from current levels of about 2.5 million.

Meanwhile, trade disputes between the United States and other major economies including China and the European Union are expected to hurt oil demand if they are not settled soon.

According to Barclays bank, worries over supply issues are becoming more evident.

Resource-pour Japan relies heavily on imports of oil from the Middle East, though crude from Iran accounted for just 5.3 percent of the country's total imports a year ago.

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