Published: Tue, August 14, 2018
Finance | By Claude Patterson

Oil edges higher on Saudi output cut and Iran sanctions

Oil edges higher on Saudi output cut and Iran sanctions

The price was up nearly 1.4 percent at about $73.61 at 1205 GMT and US light crude was up 90 cents at $68.10.

Turkey is a relatively small oil consumer, accounting for less than 1 million barrels per day (bpd) or around 1 percent of global demand, but Commerzbank analyst Carsten Fritsch says the impact of the Turkish crisis could be considerable.

Despite the cautious mood in oil markets, bullish sentiment found some support from expectations that US sanctions against Tehran would restrict Iranian crude exports, tightening global supply.

But both figures suggest the kingdom, de facto leader of OPEC, is keen to avoid a repeat of a global glut that has depressed prices over the past few years.

As for Saudi Arabia, OPEC's largest oil producer submitted to the group its own data which showed that output slipped by 200,000 to 10.28 million bpd in July.

"With U.S. sanctions on Iran back in place all eyes have been on the impact on crude oil exports from that country", ANZ bank said yesterday.

USA energy companies last week added the most oil rigs since May, adding 10 rigs to bring the total count to 869, according to the Baker Hughes energy services firm. Meanwhile, Opec raised production in July, with increases in output from Kuwait, Nigeria and the United Arab Emirates. OPEC expects non-OPEC supply to expand by 2.13 million bpd next year, 30,000 bpd more than forecast last month.

U.S. oil output from seven major shale basins is expected to rise 93,000 bpd in September to 7.52 million bpd, the U.S. Energy Information Administration (EIA) said in a monthly report on Monday.

However, OPEC ran out the prospect that trade spat between the USA and China to have much impact on the world's oil demand, unless the rifts reach beyond the world's largest two economies.

The OPEC report said it expected world oil demand to grow by 1.43 million bpd in 2019, down from 1.64 million bpd in 2018.

"Healthy global economic developments and increased industrial activity should support the demand for distillate fuels in the coming months, leading to a further drawdown in diesel inventories", it said.

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