US oil prices up after sharp drop in fuel stocks

Falih said that with sanctions on Iran coming into full force next month, there was no guarantee oil prices would refrain from going higher. "Two of our oil companies have made nominations to purchase Iranian oil in November".

OPEC spare production capacity in 2018 of about 1.6 million barrels per day will fall to 1.3 million barrels per day in 2019, down from 2.1 million barrels per day in 2017, it said. But India, Japan and South Korea are already scaling back on purchases of Iran crude oil, which suggests that the number will be bigger than previously thought.

Indian Oil Corporation (IOC) and Mangalore Refinery and Petrochemicals Ltd (MRPL) have reportedly placed order for 1.25 MT of crude oil from Iran.

According to Mriganka Jaipuriyar, associate editorial director at S&P Global Platts, oil markets will remain on tenterhooks as there is lack of clarity on Iran's real crude oil export volumes. Meanwhile, countries like China are increasing their stock import ahead of any potential disruption due to the looming sanction.

"The Saudis I think will begin to tilt - they were already doing that beforehand - they'll be doing more business with China and Russian Federation", the analyst said. The market is getting cautious ahead of Iran sanctions and we have seen that major players are increasing their crude supply, including the USA and the UAE.

Saudi Energy Minister Khalid al-Falih said at an investment conference in Riyadh on Tuesday that despite expected supply disruptions from USA sanctions against Iran that kick in from November 4, Saudi Arabia would step up to "meet any demand that materialises to ensure customers are satisfied".

Though bound together by security considerations and oil, the ties and friendship between the U.S. and Saudi Arabia have not always been smooth.

Yesterday, the oil minister assured the market that the country was satisfied with the current oil prices. During the same quarter, Iran's crude oil output dropped 5.73 per cent to 3,599 thousand barrels per day. He added that Riyadh had capacity to increase output to 12 million bpd and its Gulf OPEC ally, the United Arab Emirates, could add another 0.2 million bpd.

Meanwhile, Russia's oil production is now 150,000 bpd higher than the October 2016 level, the baseline for the global oil production deal, TASS news agency quoted Energy Minister Alexander Novak as saying. This was higher than the 1.8 million that traders were expecting. The buildup - at 6.5 million barrels - was twice what analysts were looking for and was the largest in four months.

Other non-OPEC producers have also produced only 66,000 barrels per day of additional oil between May and September, the Iranian minister said, citing OPEC's estimates.

"We export as much as two barrels for any barrel that disappeared from Iran recently".

  • Eleanor Harrison