Oil extends gains after unexpected decline in USA stockpiles

Donald Trump announced that the US would withdraw from the Iran nuclear deal. Subsequently he signed an executive order reinstating sanctions against Iran

Analysts attribute the change a year ago to the output cuts initiated by Saudi Arabia and the increased availability of heavy grades of crude from Iraq at a higher discount, which are more suited for use in Indian refinery complexes.

"Many European companies are leaving Iran, but [South] Korean firms have declared they will stay in Iran", he said, adding that Korean companies understand how important it is to be present in the Iranian market.

'You cannot keep the price low with slogans and intimidation, ' considered Zanganeh.

Oil minister Dharmendra Pradhan today said the government has no business to interfere in the pricing decisions by the Oil Marketing Companies (OMCs) related to petroleum products.

Refusing to say if India has sought a waiver of sanctions from the United States as to continue purchasing crude oil from Iran, Oil Minister Dharmendra Pradhan said he has articulated the country's position on importing oil from the Persian Gulf nation in November and "there is nothing new to repeat".

Seoul has fully complied with the USA sanctions in the past few months, and totally stopped its oil imports from Iran in September for the first time in six years. While buyers of Iranian crude are still awaiting possible waivers from the Trump administration, the International Energy Agency's executive director Fatih Birol urged Opec and other major producers to boost output as oil markets are entering the "red zone".

"So far the oil market is withstanding the verbal war and though prices are slightly higher. they are a good $5 below the peak last week", said City Index analyst Fiona Cincotta.

Falih said oil prices would "easily be at the three digit range had it not been for the extra effort the kingdom has done over many years by investing in capacity and then unleashing that capacity, delivering barrels over last few months, reversing inventory draw down". The global benchmark, which hit a more than two-week low late last week as equity markets dropped, is trading around $5 below a four-year high of $86.74 marked on October 3.

The diplomatic crisis over Saudi Arabia's alleged involvement in the disappearance of journalist Khashoggi could affect oil prices, too.

Observed shipments of crude and condensate dropped to 1.72mn bpd, down 260,000 barrels from the previous month, according to ship-tracking data compiled by Bloomberg.

The immediate price response was somewhat muted, with Brent crude oil rising modestly on the news.

Investors worry Saudi Arabia could use oil supply to retaliate against critics.

US President Donald Trump gave Saudi Arabia the benefit of the doubt in the disappearance of journalist Jamal Khashoggi even as US lawmakers pointed the finger at the Saudi leadership and Western pressure mounted on Riyadh to provide answers.

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