Record US output takes its toll on oil prices

21 July, 2018, 07:54 | Author: Lora Ball
  • The German share price index DAX board is seen at the stock exchange in Frankfurt Germany

Saudi Arabia dismissed assertions that it'll oversupply demand as "without basis" and said it "does not try to push oil into the market beyond its customers' needs".

In the wake of these warnings the Japanese banks then notified that they would stop settling transactions related to Iranian Oil. Gasoline inventories have swelled amid high runs and tepid demand growth, which will hurt the margin for further processing of gasoline.

"The organization's legal team will hold talks in the coming days with law firms including White & Case about the "No Oil Producing and Exporting Cartels Act", one of the people said, asking not to be identified because the information is not public".

Earlier reports had President Donald Trump just weeks ago asking Saudi Arabia to increase oil production to make up for shortfalls in Venezuela as well as anticipated shortfalls in Iran as we close in on November when the USA sanctions against Iran take effect.

Brent crude settled up 49 cents at $73.07 a barrel.

Iran, which is the third-largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC), now counts China, India, South Korea, Japan, and Turkey as its biggest importers, but not for long.

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Not only is U.S. output at a record level but other major oil producing nations such as Russian Federation and the members of the Organization of the Petroleum Exporting Countries are having trouble reducing their production.

The impact of US sanctions on Iran's oil shipments, which remains highly uncertain, will play a big part in determining the final outcome.

An industry source familiar with the matter said Saudi oil exports in June were about 7.2 million bpd, while the latest official figures show May exports at 6.984 million bpd. As evidence, the Kingdom will reduce crude exports next month by roughly 100,000 bpd. That was the biggest increase since the end of 2016.

"You're having supply come back on to the markets, so it's not surprising to see a little bit of weakness", Zahir said.

United States crude stocks rose by 5.8-million barrels last week, compared with a forecast of a decline of 3.6-million barrels. Sanctions affecting Iran's energy sector will be resumed on November 4. However, comments by Saudi Arabia's Energy Ministry, pledging not to flood world markets with oil, turned the momentum around on Thursday and helped the commodity to rebound sharply from an intraday low level of $66.62. Last week the National Oil Corp. moved to lift force majeure on several export terminals, and said that it would begin restoring the disrupted supply.

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