Oil prices rise on declining U.S. crude stockpiles, looming Iran sanctions

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Oil prices rose more than 2 percent on Tuesday as US sanctions squeezed Iranian crude exports, tightening global supply despite efforts by Washington to get other producers to increase output.

Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, March 24, 2016.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $69.84 per barrel at 0428 GMT, up 59 cents, or 0.9 percent, from their last settlement. Brent, the worldwide benchmark, rose $1.67 a barrel to trade above $79.

The increases extended a more than 2 percent climb in both crude benchmarks the previous session.

US crude stocks fell by 8.6 million barrels in the week to September 7 to 395.9 million barrels, the American Petroleum Institute (API), a private industry group, said on Tuesday. US shale, while signs of a production slowdown have yet to really materialize in the production data from the EIA, is still running into a rough patch.

The U.S. Energy Information Administration (EIA) recently unveiled a report showing that during the first six months of 2018, the United States exported 7.3 million barrels per day of crude oil and petroleum products, setting monthly highs along the way.

South Korea has become the first of Iran's top-three oil customers to cut imports to zero before US sanctions take effect in November. "The impact of the USA sanctions on Iran is firmly being felt" in Europe but "the picture could not be more different on the other side of the Atlantic Ocean".

In addition, the European Union, which had previously joined the U.S.in targeting Iranian oil exports in 2012, has shown its unwillingness to follow Washington's lead this time around, openly vowing to rebel against the USA sanctions regimen and increasing the likelihood that Europe will continue to buy some Iranian oil despite US threats. "The situation should be closely watched, the right decisions should be taken".


The issue of additional United States sanctions that are being imposed on Iran was again a major subject of market attention, with Russian Energy Minister Alexander Novak warning of the impact that the the U.S. action could have on Iranian oil sales.

"It is related to the fact that not all the countries have managed to restore their market and production", he said, referring to outages and falling production in Mexico and Venezuela.

"Whether Russia and Saudi Arabia will fill any unexpected supply gaps remains to be seen until November", said Hussein Sayed, chief market strategist at ForexTime.

Iraq, OPEC's 2d-greatest producer which noticed method-file production in August at four.65 million bpd, is at the moment witnessing violent protests in and round Basra, which hosts the bulk of its oil production facilities and its greatest deepwater port. Demonstrators receive blocked roads and threatened to close down oil facilities in boom in opposition to failed speak products and providers, unemployment and political corruption.

But it said rising demand could also be checked.

Oil traders were also watching the progress of category 4 Hurricane Florence that is expected to make landfall by Friday.

Distillate stockpiles, which include diesel and heating oil, rose by 6.2 million barrels, versus expectations for a 1.4 million-barrel increase, the EIA data showed.

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