Oil prices set for weekly gain after steep drop

Oil prices set for weekly gain after steep drop

A senior Iranian oil official says the United States will fail to drive Iranian oil exports down to zero as the market is already tight and rival producers are not able to make up the shortfall.

While officially still defiant on the USA demand to cut oil imports from Iran to zero before the November 4 deadline or face sanctions, New Delhi is hustling to find ways around the impending crisis, which involves not just India's energy needs, but also the strategic port of Chabahar, which India is helping develop as a gateway into Afghanistan.

Oil processors in South Korea, Iran's top customer for South Pars condensate, halted Iranian oil liftings in July as banks, insurance and shipping companies wound down business related to Iran before USA sanctions the country's petroleum sector kick in on November 4.

It is also encouraging other oil producers such as Saudi Arabia, Russia and other member states of the Organization of the Petroleum Exporting Countries (OPEC) to pump more to meet the shortfall.

Earlier this week, USA light crude oil prices hit a high price of $70.50 per barrel.

Iran is now OPEC's third-largest producer, but the United States wants to cut its production down to zero by November as part of sanctions imposed on the country.

If those estimates are right, it would mark the first time since 1973 that the USA has led the world in output, according to government figures.

Although the EIA does not publish crude production forecasts for Russia and Saudi Arabia in its short term outlook, it expects that USA output will continue to exceed Russian and Saudi production for the remaining months of 2018 and through 2019.

The contract will be based on the differential of the four crudes to the dated Brent benchmark price and will represent 1,000 barrels of oil.

Washington reimposed some of the financial sanctions from August 6, while those affecting Iran's petroleum sector will come into force from November 4.

The rise in production was the cartel's biggest month-over-month rise in over two years and brought the group's total supply to a nine-month high.

"The Iran story is the dominant factor for prices".

Iran's oil production fell for the fourth month in a row, according to OPEC data, to 3.584 million barrels, compared to 3.734 million barrels last July.

While OPEC production has increased since then, Saudi Arabia has added less crude than it initially indicated.

Here are the production numbers of the OPEC countries in the past two months.

Novak also said that sanctions on Iran brings "huge uncertainty on the market - how the countries, which buy nearly 2 million bpd of Iranian oil will act".

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