Published: Tue, October 09, 2018
Markets | By Otis Pena

Saudi Arabia unable to replace lost Iranian oil - Iran’s oil minister

Saudi Arabia unable to replace lost Iranian oil - Iran’s oil minister

Uncertainty has been the buzzword in the oil market over the past couple of months.

Alongside potential waivers on Iranian sanctions, oil supply is seemingly back on the rise with Libya recently boosting oil production to 1.25mbpd (200kbpd more than the September average). China is reportedly reducing its oil imports from Iran, though it's not likely to fully comply with the USA demands.

LONDON-Oil prices started the week under pressure, amid reports the US could grant waivers to some buyers of Iranian crude when oil sanctions on the Islamic Republic go into effect next month. Indian Oil Corp Chairman Sanjiv Singh said options for paying Iran are under discussions.

Furthermore, Leszczynski says that if India were to stop or significantly reduce imports from Iran, it would complicate the strategic relationship it is trying to build between the two countries. But Iran, OPEC's third-largest producer, has repeatedly announced that its oil exports can not be reduced to zero because of high demand levels in the market.

Hedge funds and other money managers started to bet on rising prices again, and they did so in Brent in five consecutive weeks.

That is the longest streak of weekly cuts since October past year. In the week to October 2, the net long position in Brent Crude dropped by 2.9 percent, after a 53-percent surge in the previous five weeks, according to Bloomberg estimates on ICE Futures Europe data.

Pradhan said he had urged Saudi Arabia's oil minister to keep in mind the interests of oil consuming countries when it came to higher prices.

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Higher prices will not be good for consumers, as Novak and all oil officials are aware.

USA light crude was up 45 cents at $74.74.

The oil minister also teased the idea of using a different currency to buy the Iranian oil - their own currency the Indian rupee. Worldwide crude oil prices had reached a record high of $147 per barrel in July 2009.

"What Saudi Arabia had been supplying the market with, were not from [its] spare capacity but from tapping its oil stocks", he pointed out.

Persisting uncertainties on both the supply and demand side are making the market and participants jittery.

With Iran sanctions still on the table, potential spare capacity constraints and also a slowdown in US drilling, USA bank J.P.Morgan said in its latest cross-asset outlook for clients that it recommended to "stay long Jan '19 WTI on supply risks to crude".

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