OPEC warns of threats to oil supply from Iran, other producers

Jermaine Castillo
September 22, 2018

Oil markets fell on Tuesday as the latest escalation in the Sino-U.S. trade war clouded the outlook for crude demand from the two countries, which are the world's top two oil consumers.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 4 cents, or 0.1 percent, at $69.81 a barrel after climbing 1.4 percent in the previous session. Problems with supply are already being felt with most nations complying ahead of time with USA demands to end all exports of oil from Iran.

OPEC ministers are also slated to meet this Sunday, but no decisions or adjustments are expected to be made while the OPEC group meets to discuss output policies and their compliance.

US President Donald Trump has repeatedly urged the cartel to raise its production and said that other countries must stop buying oil from Iran or face US sanctions.

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He didn't address how the global oil industry immediately can replace Iranian crude supplies in an already-tight market.

Benchmark Brent crude is already nearing 80 USA dollars a barrel and some believe this figure may go even higher.

Crude has mostly stayed below $70 a barrel since mid-July as a trade dispute between the USA and China threaten global economic growth. "The impact on economic growth is slowly dripping in, which again hurts oil prices", said Wang Xiao, head of crude research at Guotai Junan Futures.

Reuters previously reported that Saudi Arabia wants oil to stay between $70 and $80 a barrel for now, as the world's biggest crude exporter strikes a balance between maximizing revenue and keeping a lid on prices until US congressional elections.

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According to data by the JODI database, which collects self-reported oil figures from 114 countries, Saudi Arabia's crude oil exports in July dropped by 126,000 bpd month on month, to 7.12 million bpd.

U.S. Energy Secretary Rick Perry told Reuters at the weekend that he did not expect any price spikes and that Saudi Arabia, the U.S and Russian Federation could between them raise global output in the next 18 months.

The Chief of OPEC, Mohammad Barkindo said that Iran is a very important member of the oil exporting organisation, however, it has no choice but to continue working with all parties.

Also weighing on oil prices, US drillers added two oil rigs in the week to December 1, bringing the total count up to 749, the highest since September, General Electric Co's Baker Hughes energy services firm said on Friday.

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