India welcomes United States waiver on oil import sanctions, "examining details", says MEA

Dwayne Harmon
November 10, 2018

Also, the United States granted waivers on Iranian sanctions to eight countries who import that country's crude. And, in any case, any shortfall in supplies from Iran is likely to be more than covered by supplies from elsewhere.

Iraq, the second-largest producer within the Organization of the Petroleum Exporting Countries (OPEC) behind Saudi Arabia, is targeting production capacity of 5 million bpd in 2019, up from 4.6 million bpd now, Oil Minister Thamer Ghadhban said on Tuesday.

India is also Iran's second-biggest oil customer and will be one of the most exposed to a forced drop in supply because of its relative proximity to Iran.

Oil neared three-month lows on Thursday, surrendering early gains as investors focused on global crude supply, which is increasing more quickly than many had expected. But, fearing a price spike, it granted Iran's biggest buyers - China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey - sanctions waivers.

USA crude stocks climbed by 7.8 million barrels in the week ending November 2 to 432 million, data from the American Petroleum Institute showed on Tuesday.

However, Saudi Arabia and Russian Federation are reportedly in talks to orchestrate another round of cuts. Domestic production surged to a record 11.6 million barrels a day, while stockpiles at the key storage hub in Cushing, Oklahoma, climbed by 2.42 million barrels.

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However, oil markets were held back somewhat after the United States became the world's top crude producer as its output hit record levels. Tehran worries OPEC and non-OPEC countries such as Russian Federation will increase their production to fill the gap in response. The International Monetary Fund forecasts that the sanctions will cause Iran's economy to contract 1.5 per cent this year and 3.6 per cent next year - pain that Trump has boasted about. However, under the US sanctions, the eight "constituencies" that were granted Significant Reduction Exemption (SRE) have the possibility to import up to 1.5 mbpd, making the sanctions whammy largely rhetoric.

Brent futures for January settlement edged up 9 cents to $70.74 a barrel on the London-based ICE Futures Europe exchange.

That may led to crude stockpiles, as has been seen in the United States, growing further.

Producers including Saudi Arabia and Russian Federation had opened the taps earlier this year following unprecedented political pressure from Trump.

Thanks to the high fiscal breakevens, JP Morgan believes Saudi Arabia would try to keep oil price supported closer to $80/bbl.

"If you look at oil prices they've come down very substantially over the last couple of months", Trump said.

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