Oil Demand May Fall, IEA Says

Randal Sanchez
September 22, 2018

"Iranian crude oil export loadings have declined by 580,000 barrels per day in the past three months", Bank of America Merrill Lynch analysts said in a note to clients on Monday.

“Investors are now assessing the Saudis' mixed message on oil prices versus its earlier pledge to increase output, ” said Hong Sungki, a commodities trader at NH Investment & Securities Co.in Seoul.

"The growing trade dispute has hurt trading sentiment". But it is unclear how easily other producers can compensate for any lost supply.

While Iran's exports have moved in Trump's favor, the president faces the predicament of wanting oil prices to come down before US midterm elections on November 6.

Brent crude futures fell 11 cents to $77.99 a barrel, while U.S. West Texas Intermediate (WTI) crude futures slipped 8 cents to settle at $68.91 a barrel.

Bloomberg reported that while Saudi Arabia had no desire to push prices higher than US$80, it may no longer be possible to avoid it.

Crude oil started the week on a positive note as latest reports revealed that Iranian crude oil exports continued to decline amid the US sanctions.

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Traders are looking for more clarity as the Organization of Petroleum Exporting Countries and its allies meet in Algiers later this week to discuss their output.

The tariffs are likely to limit economic activity in both China and the USA and that should lower oil demand growth as less fuel is consumed to move goods for trade.

USA crude inventories rose by 1.2 million barrels to 397.1 million in the week to September 14, according to the American Petroleum Institute (API).

LONDON-Oil prices advanced on Monday on the back of a weaker dollar and continued expectations of a global supply crunch.

The International Energy Agency, the oil watchdog for industrialized countries, warned earlier this month that Brent prices could break out above $80 a barrel unless other producers act to offset deepening supply losses in Iran and Venezuela. Washington aims to cut Iran's oil exports down to zero to force Tehran to re-negotiate a nuclear deal. He added that Russian Federation was also ready to discuss cooperation with the United States to balance the oil market, but that such discussions were not being held.

Iran told on Sunday no member country should be allowed to take over another member's share of oil exports, expressing Tehran's concern about Saudi Arabia's offer to pump more oil in the face of USA sanctions on Iranian oil sales.

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