Oil under pressure from rising output, but Iran sanctions loom
Oil prices dipped on Friday as record crude output by the world`s top-three producers offset supply concerns from the start of U.S. sanctions next week against Iran`s petroleum exports.
Front-month Brent crude futures
U.S. West Texas Intermediate (WTI) crude futures
Traders said prices were weighed down by rising output.
The 15-member producer cartel of the Organisation of the Petroleum Exporting Countries (OPEC) boosted oil production in October to the highest since 2016 at 33.31 million barrels per day (bpd), a Reuters survey found this week.
That`s up 390,000 bpd from September and the highest by OPEC since December 2016, just before the group started to voluntarily withhold supply in January 2017 in order to prop up prices.
Meanwhile, U.S. crude oil production surged by 416,000 bpd to a record 11.346 million bpd in August, the U.S. Energy Information Administration (EIA) said in a monthly report this week.
On a weekly basis, U.S. crude production
"Year-on-year growth in U.S. crude oil production has averaged almost 1.5 million barrels per day in the first eight months of the year... with output from many key producing regions reaching new all-time highs," said Barclays bank.
The United States is now in a race with Russia as top producer. Russian oil production has risen to a post-Soviet record high of 11.41 million bpd so far in October, up from 11.36 million bpd in September.
With Saudi Arabia pumping out 10.65 million bpd so far in October, combined output from the top three oil producers is now higher than ever, at 33.41 million bpd, meaning that Russia, the United States and Saudi Arabia alone meet more than a third of the world`s almost 100 million bpd of crude oil consumption.IRAN SANCTIONS IMMINENT
Despite the surge in output, concerns lingered as Washington is set to impose its sanctions against Iran`s petroleum exports from next week.
Clayton Allen of Height Securities said Iran`s biggest oil customers, all in Asia, were seeking waivers to U.S. sanctions against Iran`s petroleum exports.
"Thus far, potential waivers appear targeted at India and South Korea, and they require some reductions over current import volumes while still allowing oil to flow," he said.
"We think Trump will agree to China importing some volumes, similar to the treatment that India and South Korea receive," he said.
Japan is seeking a similar deal.
Despite these efforts, Allen said any potential Iran oil sanction waivers would likely only be temporary.
"The U.S. may use waivers to slow walk implementation, but these will not apply indefinitely," he added.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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