Oil prices rise on declining USA crude stockpiles, looming Iran sanctions

South Korea Grants US Wish for Zero Oil Imports From Iran

South Korea Grants US Wish for Zero Oil Imports From Iran

Iran has started to store oil in its own tankers off its coasts ahead of the US sanctions on its oil exports that are expected to cut Tehran's ability to ship and sell oil to customers around the world.

Traders said this pulled wide open the discount of U.S. WTI crude versus Brent to around $10 per barrel, the biggest since June.

Official weekly government data will be published by the U.S. Energy Information Administration (EIA) on Wednesday.

Benchmark Brent crude futures were up $1.01 at $80.07 a barrel by 10:58 a.m. EDT (1458 GMT) after reaching $80.13 a barrel, its highest since May 22.

Saudi Arabia wants oil to stay between $70 and $80 a barrel for now as the world's biggest crude exporter strikes a balance between maximizing revenue and keeping a lid on prices until US congressional elections in November, OPEC and industry sources have told Reuters.

Washington has told its allies to reduce imports of Iranian oil and several Asian buyers, including South Korea, Japan and India appear to be falling in line. But drilling activity in the Permian basin, the largest USA oil patch, has begun showing signs of a slowdown due to limited pipeline takeaway capacity.

A group of OPEC and non-OPEC producers have been voluntarily withholding supplies since January 2017 to tighten markets, but with crude prices up by more than 40 percent since then and markets significantly tighter, there has been pressure on producers to raise output.

Russian energy minister Alexander Novak on Wednesday warned of the impact of USA sanctions against Iran.

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"Going forward, economic uncertainty, and hence questions surrounding global oil demand, coupled with geopolitical tensions, will need to be factored into maintaining a balanced market in the months to come", the report said.

OPEC said it expected demand growth of 1.41 million bpd in 2019, a 20,000-bpd downgrade from its previous forecast.

"Iran is increasingly becoming the preoccupation of the crude market", said consultants JBC Energy.

Russia, the United States and Saudi Arabia are the world's three biggest oil producers by far, meeting around a third of the world's nearly 100 million barrels per day (bpd) of daily crude consumption.

On Monday several armed men attacked the headquarters of Libya's National Oil Corporation (NOC) in the capital Tripoli on Monday.

The Economic Times (ET), an Indian daily said Iran now exports about 2 million barrels a day which is already 28% less than what they used to export in April.

Under the previous round of sanctions on Iran, OPEC's third-largest producer had used this strategy-keeping oil in floating storage off its coasts-when the USA and European sanctions in 2012-2016 cut its ability to export oil.

USA oil producers are seeking new buyers for crude they used to sell to China before orders slowed because of the trade disputes between Washington and Beijing.

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