ibusinesslines.com November 15, 2018

India to keep buying Iranian oil despite United States sanctions: Sources - International

08 October 2018, 07:40 | Kelvin Horton

India to keep buying Iranian oil despite United States sanctions: Sources - International

Official says S Arabia unable to replace Iran’s oil

Crude oil prices stayed steady Friday after a volatile week that saw the highest prices in four years.

While the Trump administration previously indicated an intent to bring Iranian crude exports "down to zero", a USA official confirmed this weekend that the White House is "in the midst of an internal process" that could result in issuing so-called Significant Reduction Exemptions "on a case-by-case basis".

Worldwide benchmark Brent crude oil futures were at $85.05 per barrel at 0653 GMT, up 47 cents, or 0.6 percent from their last close.

West Texas Intermediate (WTI) for November delivery on Friday rose to US$74.34 a barrel on the New York Mercantile Exchange.

In May, Trump pulled the U.S. out of the Iran nuclear deal despite objection from the other signatories, the UK, Russia, Germany, China, and France, re-imposing sanctions lifted under the deal.

China and India are expected to continue to import some Iranian oil after November, while South Korea and Japan will likely halt purchases. India is trying to import crude oil to Iran by $ 1.25 million tonnes of imports from the Indian Oil Corp (IOC) Mangalore.

Saudi Arabia's ARAMCO has said it will make up for market demands for crude in Iran's place. Saudi Arabia is now pumping about 10.7 million barrels per day (bpd) and can add a further 1.3 million "if the market needs that", he said.

Meanwhile, the US Energy Information Administration (EIA) reported a huge increase in weekly crude oil inventories.

"We export as much as two barrels for any barrel that disappeared from Iran recently", the prince said.

Following the USA exit, Iran and the remaining parties launched talks to save the accord.

Iran's key oil customers are opting for more medium sour crudes from Saudi Arabia, Iraq, Russia and UAE, which is causing prices of these grades to soar and putting pressure on global refinery margins. The Indian oil refiners buy Iranian crude at $3-5 a barrel discount compared to that from other parts of Middle East.

Crude futures rose to a four-year high this past week as the market prepares for the return of United States sanctions on Iran, the world's seventh largest producer of oil and a significant military power in the Strait of Hormuz, through which a third of the world's oil supply passes each day.

However, analysts do not expect Brent prices to go up to $100 per barrel as the fundamentals are not that supportive.

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