Iran clients tweaking USA sanctions as $90 oil looms

Iran clients tweaking USA sanctions as $90 oil looms

Brent crude, the benchmark for more than half the world's oil, was up 0.5% at $74.13/bbl in London, while U.S. WTI was 0.3% higher at $69.23 in NY.

French bank Societe Generale said there was now a "comfortable supply" in physical crude markets, but noted "Iran sanctions will take another one million bpd off the markets".

Sanctions on Iran's energy industry do not go back into effect until November, but analysts say the first round of sanctions that snapped back into place on Tuesday illustrated Washington's willingness to follow through on plans to hammer Iran's economy.

Cushing is a major trading hub for crude oil and a famous price settlement point for WTI on the New York Mercantile Exchange.

Crude oil prices plunge to their lowest levels in six weeks after total US stockpiles of oil and fuel rose to a seven-month high and U.S. Gasoline inventories were seen down by 1.7 million barrels, and distillate inventories were expected to rise by 220,000 barrels.

As part of its most recent retaliation against Washington in the mounting trade dispute, China will impose tariffs of 25 percent on a further $16 billion in US imports, which will affect trade in goods from fuel and steel products to autos and medical equipment.

Unipec said that it expects to trade up to 300,000 barrels per day (bpd) of U.S. crude oil by the end of the year, about triple its trading volume of United States oil last year.

Prices of the barrel of the West Texas Intermediate are trading on a weaker footing today after the EIA reported U.S. crude oil inventories decreased less than initially estimated by 1.351 mbpd during the week ended on August 3.

"It certainly is a reminder to everyone that the serious about sanctions, and it's doubtful they will grant waivers", said John Kilduff, partner at Again Capital Management in NY. On the other hand, a reduction in supply as a result of US sanctions on Iran (which will reduce supply), is providing support on moves lower.

"Oil had been largely immune from the escalating trade dispute, however the recent application of tariffs by China on USA petroleum products does represent a step change for the energy market", said Daniel Hynes, a Sydney-based analyst at Australia & New Zealand Banking Group Ltd. If more oil leaves the market than expected then the bulls will win the supply/demand battle. "We are going to work with individual countries on a case-by-case basis, but our goal is to reduce the amount of revenue and hard currency going into Iran", a senior USA administration official said on Monday. While Saudi Arabia was said to cut production last month despite a pledge in June by the Organization of the Petroleum Exporting Countries and allies to add more barrels, Russian Federation said it has the capacity to lift output to a post-Soviet record.

Distillate stockpiles, which include diesel and heating oil, rose by 1.2 million barrels, versus expectations for a 220,000 barrels increase, the EIA data showed.

Prior to this deal, International Olympic Committee had struck deals for importing 10 million barrels from six cargoes in the spot market.

Shipments into the world's biggest importer of crude came in at 36.02 million tonnes last month, or 8.48 million bpd, up from 8.18 million bpd a year ago, and just up on June's 8.36 million bpd, data from the General Administration of Customs showed.

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