US's Bolton says more sanctions likely on Iran

Secretary Jeremy Hunt

The Bank continues to remain supportive of oil price from current levels as the risks are skewed to the upside in the presence of USA sanctions on Iran and rising geopolitical risks globally.

As of 10:18 a.m. EST, WTI front-month crude prices traded at $59.71 per barrel, or a 1.6 percent decline, while Brent front-month crude oil futures traded at $69.63 per barrel, or down 1.4 percent.

Oil prices dropped below $70 a barrel for the first time since April, having reached as high as $86 last month, on the back of trade fears and waning growth.

The United States on Monday re-imposed oil and banking sanctions on Iran that where lifted under the 2015 nuclear deal but granted waivers to eight major importers to continue buying Iranian petroleum products without penalty for another six months.

OIL prices rose on Thursday after record Chinese crude imports eased concerns that a slowdown in the world's No.2 economy could stoke an emerging fuel glut.

The EIA report showed domestic crude production jumped to 11.6 million barrels per day while stockpiles at Cushing, Oklahoma, increased by 2.42 million barrels. In October, Iran exported or placed into floating storage 1.7-1.8 mbpd of crude, a number that left it roughly flat month-on-month and everyone expected the November export debacle.

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

America has already overtaken Russian Federation and Saudi Arabia to become the world's largest producer and figures from the US Energy Information Administration (EIA) suggest it was averaging 11.6 million barrels per day last week. It makes the United States the world's biggest producer of crude. It makes the USA the world's biggest producer of crude.

More U.S. oil will likely come. "And sentiment is more complicated about how severe the Iranian sanctions will be".

Iraq, the second-largest producer within the Organization of the Petroleum Exporting Countries (OPEC) behind Saudi Arabia, is targeting production capacity of 5 million bpd in 2019, up from 4.6 million bpd now, Oil Minister Thamer Ghadhban said on Tuesday.

Meanwhile, Opec's production in October reached the highest level since 2016, and Russian Federation hiked its output last month to a post-Soviet record of 11.4 million barrels a day. Pressure from the U.S.to lower prices probably will decrease now that the nation's midterm elections are over, Saxo Bank's Hansen said.

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