OPEC chief says Iran still 'very important' as USA sanctions loom

Galtero Lara
Setiembre 18, 2018

Oil markets slipped on Tuesday as the latest escalation in the Sino-US trade war clouded the outlook for crude demand from the two countries, the world's top crude consumers.

US West Texas Intermediate (WTI) crude was down 28 cents, or 0.4 percent, to $68.62 per barrel. Brent crude futures had dropped 29 cents, or 0.37 percent, to $77.76 per barrel by 12.02pm.

U.S. President Donald Trump is likely to announce new tariffs on about $200 billion on Chinese imports as early yesterday, a senior administration official told Reuters on Saturday.

"The growing trade dispute has hurt trading sentiment. The impact on economic growth is slowly dripping in, which again hurts oil prices", Wang Xiao, head of crude research at Guotai Junan Futures, said on Tuesday.

He did not specify how crude producers would compensate for declining exports from Iran, with new United States sanctions due to hit the Islamic republic's oil industry on November 4.

Since spring when the Trump Administration said it would impose the sanctions, crude traders have priced in a risk premium reflecting the supply shortages that may occur when exports from Iran, the third-largest Organisation of Petroleum Exporting Countries (OPEC) producer, are cut.

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Supporting crude futures were potential supply cuts from US sanctions on Iran.

Technical analysis from Reuters market analyst Wang Tao showed that U.S. oil prices have repeatedly failed to overcome a resistance level of $69.85 per barrel, signalling a dissipation of positive outlook.

Brent may fall more than $1 to $76.37 a barrel while WTI crude prices may revisit the September 14 low of $67.94, he wrote.

"On the one hand" Ardebili said, "Russia and Saudi Arabia, under the pretext of balancing the supply and demand of the world, are seeking a part of Iran's market share; on the other hand, some OPEC members are hands in hands with the United States to strike some OPEC founding members".

In a move heavily opposed by Iran, OPEC and other oil producers including Russian Federation agreed in June to boost crude output by around a million barrels a day, reversing course after supply cuts that had cleared a global glut and boosted prices.

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