Reuters: Oil edges up on looming Iran sanctions, but rising global supply caps market

08:55, 29 August 2018
Economy
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REUTERS

International Brent crude oil futures LCOc1 were at $76 per barrel at 0257 GMT, up 5 cents from their last close, Reuters said.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were up 6 cents at $68.59 a barrel.

Traders said crude prices have been supported by the prospect of U.S. sanctions against Iran, which will start to target its oil industry from November.

Read alsoReuters: Oil prices edge up on supply disruption worries

Bowing to pressure from Washington, many crude buyers have already reduced orders from OPEC’s third-biggest producer.

Although Tehran is offering steep discounts, Iran's August crude oil and condensate loadings are estimated at 2.06 million barrels per day (bpd), versus a peak of 3.09 million bpd in April, trade flows data on Thomson Reuters Eikon showed.

Another concern is crisis-struck OPEC-member Venezuela, where oil exports have dropped by half since 2016 to below 1 million bpd.

To stem tumbling output, Venezuelan state-run oil firm PDVSA said on Tuesday it had signed a $430 million investment agreement to increase production by 640,000 bpd at 14 oil fields, valuing the investment at $430 million. However, given the country's political and economic instability, many analysts doubted whether this investment would go through.

Despite the risk of disruption especially from OPEC-countries like Venezuela, Iran, Libya and Nigeria, Bank of America Merrill Lynch said global supply could climb towards year-end.

"Heading into 4Q18, we expect rising non-OPEC oil production as supply outages abate and greenfield projects ramp up," the U.S. bank said in a note to clients.

"Currently, non-OPEC supply outages are at a 15-month high of 730,000 barrels per day. However, nearly half of these volumes are in the process of being restored," it said.

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