06 November 2018, News Wires — Oil prices fell on Tuesday after Washington granted sanctions exemptions to top buyers of Iranian oil, as the market was left to work out the exact impact of the waivers.
Benchmark Brent crude futures were down 43 cents at $72.74 a barrel by 1507 GMT.
U.S. West Texas Intermediate crude futures were at $62.95 a barrel, paring some earlier losses but still down 15 cents after six sessions of falls and hovering near lows last seen in April.
The United States on Monday restored sanctions targeting Iran’s oil, banking and transport sectors and threatened more action to stop what Washington called its “outlaw” policies, steps Tehran called economic warfare and vowed to defy.
Although U.S. Treasury Secretary Steven Mnuchin said the aim was to bring Iranian oil exports to zero, Washington gave 180-day exemptions to eight importers – China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey.
This group takes as much as three-quarters of Iran’s seaborne oil exports, trade data shows, meaning Iran will still be allowed to export some oil for now.
Iran’s crude exports could fall to little more than 1 million barrels per day (bpd) in November, compared with a 2018 high of around 2.6 million. But that figure could rise from December as importers use their waivers.
“Donald Trump being Donald Trump has no qualms about making U-turns depending on his mood changes. The oil market is desperately trying to evaluate the possible impact of U.S. sanctions on Iranian production and exports,” PVM said in a note.
Meanwhile, concerns about demand continue. The trade dispute between the United States and China threatens growth in the world’s two biggest economies and currency weakness is pressuring economies in Asia, including India and Indonesia.
On the supply side, oil is ample despite the sanctions against Iran as output from the world’s top three producers – Russia, the United States and Saudi Arabia – is rising.
The three countries combined produced more than 33 million bpd for the first time in October, meaning they alone meet more than a third of the world’s almost 100 million bpd of crude oil consumption.
Amid ample supply, top crude exporter Saudi Arabia has cut the December price for its Arab Light grade for Asian customers.
The price pressure on oil has scared off financial traders.
Hedge fund managers were net sellers of petroleum-linked futures and options last week.