Published: Thu, August 09, 2018
Economy | By Shawn Conner

Crude slumps as trade war overshadows drop in US inventories

Crude slumps as trade war overshadows drop in US inventories

Watch oil trade in real time here.

Markets remained supported by the introduction on Tuesday of new US sanctions against Iran, which initially target Iran's purchases of USA dollars - in which oil is traded - as well as metals trading, coal, industrial software and its auto sector.

Brent and West Intermediate Texas crudes traded generally sideways last week, despite the pronounced weakness at the end of the week. Brent, the worldwide benchmark, rose 1.3% $74.65 a barrel.

However, many European countries, China and India, oppose the sanctions, but the USA government said it wants as many countries as possible to stop buying Iranian oil.

Oil prices had been edging higher prior to the announcement. Russia Foreign Ministry held the United States in violation of global law and the UN Resolution 2231 which pertains to the Iran Nuclear Deal.

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President Donald Trump tweeted on Tuesday that the sanctions were "the most biting sanctions ever imposed".

Looming US sanctions against Iran will likely hit Tehran's oil sales overseas, and it could lead to a price spike in oil contracts.

Saudi Arabia will probably want to ensure that output decisions remain attributed to OPEC or OPEC+ rather than assume sole responsibility or joint accountability with Russian Federation, which is not a member of the Organization of the Petroleum Exporting Countries. But with opposition from other signatories of the agreement, especially among European allies, Sayed said it's becoming hard to guess how many barrels will be off the market by November. It's not clear how long the temporary halt will last, but one of the sources said Unipec has no new bookings of U.S. crude until at least October.

"We are going to work with individual countries on a case-by-case basis, but our goal is to reduce the amount of revenue and hard currency going into Iran", a senior United States administration official said on Monday.

HPCL, for example, will not be buying oil from Iran in August, chairman M. K. Surana told Reuters last week, but did not elaborate on whether the refiner would resume importing Iranian oil after that.

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However, the U.S. has asked all nations to stop their oil imports from Iran by November 2018 as Trump vouches to bring Iran's oil sales to zero.

Meanwhile, other major producers are ramping up their output.

Because the output increase had already been agreed between Saudi Arabia and Russian Federation, and was in fact underway, Iran had little choice.

Shipments into the world's biggest importer of crude came in at 36.02 million tones last month, or 8.48 million bpd, up from 8.18 million bpd a year ago, and just up on June's 8.36 million bpd, data from the General Administration of Customs showed.

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