Oil prices drop after Iran sanction carve-outs

Oil prices drop after Iran sanction carve-outs

Oil prices drop after Iran sanction carve-outs

From some 2.6 million barrels per day (bpd) of exports in 2017, Iran's exports dropped to around 2 million bpd in recent months, according to Refinitiv data. That revived concerns of a supply glut, in contrast to earlier fears over a crude crunch due to shrinking exports from the Persian Gulf state. WTI is set to fall for a fifth week, down 4.1 percent so far this week.

The API reported a draw in gasoline inventories for week ending November 2 in the amount of 1.2 million barrels.

"The market is now going to look to Opec and non-Opec producers to rein in production as the USA has granted eight countries waivers from sanction, which in essence adds to supply", said Andrew Lipow, president of Lipow Oil Associates in Houston.

Italy and Turkey have been importing around 200,000 bpd of oil from Iran over the past two years, with Greece importing less than 100,000 bpd.

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Prices fell to a almost eight-month low on Wednesday after the U.S. Energy Information Administration reported the seventh consecutive weekly increase in U.S. crude stockpiles.

The U.S. bank also said "payments for the oil by the exempt countries must go into escrow accounts in their local currency" and that this "means the money won't directly go to Iran and it can only be used to buy certain non-sanctioned goods from its crude export customers". USA sanctions had been lifted under the auspices of the 2015 Joint Comprehensive Plan of Action (JCPOA or, more simply, the Iran nuclear deal) negotiated by the Obama administration along with China, France, Russia, the U.K., Germany, and the European Union. These are also Iran's biggest buyers, meaning Iran will be allowed to still export some oil for now. -China trade war will dampen fuel demand as supply grows from multiple directions.

Japan's refiner JXTG Holdings said on Wednesday it might resume orders of Iranian oil in December. As Pompeo referred to the exemptions for the eight countries as "temporary", surely negotiations continue between the United States and India on how to satisfy Washington's sanctions aims and India's strategic necessities.

The United States "sincerely hopes" accidents do not occur, he said, but he noted that an Iranian tanker was involved in a major accident in the East China Sea in January that resulted in the loss of the ship and all its crew as well as a massive oil spill.

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Mr Trump was keen to talk up his administration's capability of completely isolating Iran.

The sanctions reimposed on Iran's oil exports - its main revenue source - and financial sector were triggered by US President Donald Trump's May 8 decision to abandon the 2015 global deal created to block Tehran's development of nuclear weapons.

This has served to take the sting out of the sanctions threat, which helped to lift global benchmark Brent crude futures to four-year highs of nearly $87 a barrel in early October.

Now it will be key to watch "what happens after the exemptions expire in 180 days", the merchant trader said.

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