Published: Fri, September 14, 2018
Economy | By

Oil hits $80 as Iran fears mount

Oil hits $80 as Iran fears mount

The upturn in oil prices come as the United States' sanctions squeezed Iranian crude exports and after the USA crude oil production in 2019 was forecast to grow at a slower rate than previously expected, prompting supply concerns.

Total Iranian oil shipments for September-although we're just one third into the month and more tankers could leave later in September-slumped to 1.3 million bpd through September 13, compared to just above 2 million bpd in August, when Iranian exports started to fall noticeably, according to Bloomberg's data.

Oil markets were also watching Hurricane Florence offshore the United States amid surging demand for gasoline and diesel, although crude output will not be affected on the storm's current route.

US crude stocks fell by 8.6 million barrels in the week to September 7 to 395.9 million, the American Petroleum Institute (API) said on Tuesday.

Outside the United States, traders have been focusing on the impact of USA sanctions against Iran that will target oil exports from November.

Crude oil prices gained traction on Tuesday and finally staged a decisive recovery with the barrel of West Texas Intermediate breaking above the $69 mark.

Major Japanese refiners were said last week to have officially notified Iran that they would halt all imports of Iranian oil for October while they wait for the Japan-U.S. talks on Iranian oil imports to make a permanent decision on how to proceed in November.

"We think oil market fundamentals are increasingly supportive of crude prices, at least at current levels", said Gordon Gray, HSBC's global head of oil and gas equity research.


"South Korea bought 194,000 bpd from Iran in July", OilPrice said.

Benchmark Brent crude oil was down 65 cents a barrel at $79.09 by 1200 GMT.

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.

"This is a huge uncertainty on the market how countries, which buy nearly 2 million barrels per day (bpd) of Iranian oil, will act".

Global oil output hit a record last month, and the IEA sees continued increases in oil production.

"World demand will average 98.82 million bpd in 2018, a demand growth of 1.62 million bpd", said S&P.

EIA revises down USA crude oil output expectations.

The US crude production is expected to rise 840,000 bpd to 11.5 million bpd next year, lower than a previous expectation for a rise of 1.02 million bpd to 11.7 million bpd, the US Energy Information Administration said in a monthly report.

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