Oil slips as economic concerns counter tighter supply

Oil prices climb as Iran sanctions loom

Benchmark Brent crude futures rose 47 cents to $79.53 a barrel, by 1649 (GMT).

The Persian country will by November 4 see a slew of countries already abandoning oil supply contracts and the rest scrambling for alternatives as crushing U.S. sanctions on Iran threaten to impose additional sanctions on those defying the ban on crude imports from the country. 4 date for imposing sanctions draws nearer, the premium has increased.

Crude oil prices gained traction on Tuesday and finally staged a decisive recovery with the barrel of West Texas Intermediate breaking above the $69 mark. Analysts had expected a decrease of 805,000 barrels.

But the US 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.

Russian energy minister Alexander Novak said global oil markets were fragile due to geopolitical risks and supply disruptions.

United States crude oil production fell by 100,000 bpd, to 10.9 million bpd, as the industry faces pipeline capacity constraints.


"Markets. are expecting substantial price pressure as Iran sanctions loom", said Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA in Singapore.

US crude inventories fell by 5.3 million barrels in the last week, the US Energy Information Administration said on Wednesday. Novak did not provide details.

A group of producers around OPEC and Russian Federation 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 Russian Federation and OPEC to raise output.

The Wall Street Journal said OPEC's total oil production climbed last month, in a sign the oil cartel is sticking with a decision to begin pumping out more barrels of crude this summer after more than a year of holding back output.

"This is a huge uncertainty on the market how countries, which buy nearly 2 million barrels per day (bpd) of Iranian oil, will act".

Although the shipment hiatus is unlikely to signal that China has been purposefully scaling back purchases to comply with USA pressure to have Iranian oil sales at zero, it could mean that Chinese refiners were looking for better terms for Iranian oil purchases, according to Bloomberg.

At the same time, American oil producers are seeking new buyers for crude they used to sell to China before orders virtually dried up because of the trade disputes between Washington and Beijing.

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