Oil rises as U.S. sanctions on Iran squeeze supply
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[September 11, 2018]
By Christopher Johnson
LONDON (Reuters) - Oil prices rose on
Tuesday as U.S. sanctions squeezed Iranian crude exports, tightening
global supply despite efforts by Washington to get other producers to
Brent crude oil <LCOc1> was up 60 cents at $77.97 a barrel by 1130 GMT.
U.S. light crude <CLc1> was up 25 cents at $67.79.
"The impact of the U.S. sanctions on Iran is firmly being felt," said
Tamas Varga, analyst at London brokerage PVM Oil. "The biggest worry is
obviously the amount of Iranian oil that is disappearing from the
Washington has told its allies to reduce imports of Iranian oil and
several Asian buyers, including South Korea, Japan and India appear to
be falling in line.
But the U.S. government does not want to push up oil prices, which could
depress economic activity or even trigger a slowdown in global growth.
U.S. Energy Secretary Rick Perry met Saudi Energy Minister Khalid al-Falih
on Monday in Washington, as the Trump administration encourages big
oil-producing countries to keep output high. Perry will meet with
Russian Energy Minister Alexander Novak on Thursday in Moscow.
Russia, the United States and Saudi Arabia are the world's three biggest
oil producers by far, meeting around a third of the world's almost 100
million barrels per day (bpd) of daily crude consumption.
Their combined output has risen by 3.8 million bpd since September 2014,
more than the peak output Iran has managed over the last three years.
Russian Energy Minister Alexander Novak said on Tuesday that Russia and
a group of producers around the Middle East which dominate the
Organization of the Petroleum Exporting Countries may sign a new
long-term cooperation deal at the beginning of December, the TASS news
agency reported. Novak did not provide details.
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A view of Equinor's oil platform in Johan Sverdrup oilfield in the
North Sea, Norway August 22, 2018. REUTERS/Nerijus Adomaitis/File
A group of OPEC and non-OPEC producers have been voluntarily withholding
supplies since January 2017 to tighten markets, but with crude prices up by more
than 40 percent since then and markets significantly tighter, there has been
pressure on producers to raise output.
As Middle East markets tighten, Asian buyers are seeking alternative supplies,
with South Korean and Japanese imports of U.S. crude hitting a record in
U.S. oil producers are seeking new buyers for crude they used to sell to China
before orders slowed because of the trade disputes between Washington and
This is one reason that the discount for U.S. crude versus Brent has widened to
around $10 per barrel, the biggest since June <LCO-CLFVMc1>, traders said.
GRAPHIC - U.S. crude exports to Asia: https://tmsnrt.rs/2CITKcJ
GRAPHIC - Iran crude exports to Asia: https://tmsnrt.rs/2NDV3Os
GRAPHIC - Discount of U.S. crude vs Brent: https://tmsnrt.rs/2CEdfTu
(Reporting by Christopher Johnson in LONDON and Henning Gloystein in SINGAPORE;
editing by Jason Neely and David Evans)
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