Oil falls below $80 on rising US stockpiles

Oil falls below $80 on rising US stockpiles

Oil falls below $80 on rising US stockpiles

By taking modestly less aggressive positions in the coming weeks, the US could distance itself from another example of aggressive Saudi policy and reduce USA dependence on the Saudis for stabilizing oil markets as Iranian exports are reduced.

Brent crude, the global benchmark, was down $1.07 at $78.98 a barrel at 1330 GMT.

An unprecedented volume of Iranian crude oil is set to arrive at China's northeast Dalian port this month and in early November before USA sanctions on Iran take effect, according to an Iranian shipping source and data on Refinitiv Eikon.

During 2017, Iran was Turkey's top crude oil source, accounting for 11.5 million tons of its total purchases nearing 26 million tons, followed by Iraq and Russian Federation.

US inventories rose 6.49 MMbbl last week, government data showed, more than twice the amount forecast in a Bloomberg survey. In 2017, the South purchased 147 million barrels of Iranian oil.

United States legislators pointed the finger at the Saudi leadership over the disappearance of prominent Saudi critic and journalist Jamal Khashoggi, suggesting sanctions could be possible.

CNPC is not expecting any Iranian oil to arrive at Dalian, a source familiar with the matter said, adding that buyers are unlikely to lift Iranian oil from bonded tanks in Dalian due to the USA sanctions.

Also, more analysts are believing the impact of renewed US sanctions on Iran, which are due to take full effect on November 4, has been fully priced into the market.

Oil traded near the lowest level in a month after a bigger-than-expected gain in American stockpiles overshadowed tensions between the USA and Saudi Arabia over a missing critic of the kingdom.

While traders had largely ignored the potential for U.S. -Saudi tensions to prompt the kingdom to restrain output earlier this week, concerns in the wake of Trump's latest statement appeared to give crude a lift, Stewart Glickman, energy equity analyst at CFRA, told MarketWatch.

He also said that the US response to Saudi Arabia would likely be "very severe" but he would still want to get to the bottom of what exactly happened.

Saudi Arabia's existing pledge to increase production is seen as crucial to the Trump administration's effort to impose renewed sanctions on Iran while keeping a lid on crude prices.

Abdollahi said the U.S. bans would not include the cooperatives sector as it is not dependent on the government, and this gives Seoul a great chance to increase its interactions with Iran at a time when European firms are leaving the country. "That comes after prices dropped sharply on Wednesday as USA crude stockpiles surged more than what the market had expected".

And then there's Saudi Arabia, the world's largest oil exporter.

Dalian is a major oil hub in China and, Reuters notes, Iran has used storage facilities at the port to keep crude during the previous worldwide round of sanctions against Tehran.

As the United States sanctions on Iran loom, the panic in the market over the loss of Iranian crude is increasing.

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