U.S. signals Iran oil sanctions waivers possible

Dwayne Harmon
November 2, 2018

U.S. sanctions on Iran's oil sector that were lifted as part of an internationally-brokered nuclear deal with Tehran are set to go back into effect November 5 after U.S. President Donald Trump pulled the United States out of the 2015 accord in May.

Leading oil officials, including Saudi Energy Minister Khalid al-Falih, say the tactic is clouding the world oil markets because other Organization of the Petroleum Exporting Countries (OPEC) are having trouble monitoring the daily output from Iran, which is OPEC's third-largest producer.

Iran's First Vice President Es'haq Jahangiri said on Sunday that the USA was unable to prevent the country from selling crude oil to worldwide clients. About 9.4 percent of the total 220.4 million tonnes of crude exported by India in 2017 and 2018 was from Iran.

Front-month Brent crude oil futures were at $77.15 a barrel at 0644 GMT, down 19 cents, or 0.3 percent, from their last close.

EIA also forecast WTI prices to increase at a slightly slower rate, leading to a widening of the Brent-WTI spread to 9 dollars per barrel in October.

US President Donald Trump pulled out of the Iran nuclear deal formally known as Joint Comprehensive Plan of Action in May this year.

On Wednesday, U.S. oil prices rebounded 0.59 percent on fall of gasoline and diesel stockpiles in the previous week in the United States.

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"Mounting perception of a weakening in global oil demand due to increasing tariff issues between the US and China, while extremely hard to measure, will be maintaining some negative influence in keeping would-be buyers sidelined", Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

In North America, however, there is no oil shortage as United States crude oil production has increased by nearly a third since mid-2016 to around 11 million barrels per day.

Oil prices dipped on Tuesday, dragged down by concerns that the Sino-U.S. trade dispute will dent economic growth and by signs of rising global supply despite upcoming sanctions against Iran.

The next date of offering crude oil at IRENEX has not been announced yet.

Baghdad has been saying that it would abide by the US sanctions on Iran.

"If Turkey gets more oil from Iraq, it will be more hard for Ankara to argue it needs a US waiver to continue buying Iranian oil", the source told Reuters. Previously private oil companies could buy oil only to export oil, officials said.

Because of the concern over oil prices, a source recently told Reuters, the administration is considering limited waivers for some Iranian customers until Russian Federation and Saudi Arabia add additional supply next year, while limiting what Tehran can do with the proceeds in the meantime. -China trade war are stirring demand-growth concerns.

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