Tuesday, 23 October, 2018

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

Official says S Arabia unable to replace Iran’s oil Crude rises as alarm bells sound over supply crunch
| 08 October, 2018, 12:56

"It is still early to say how India will settle its trade with Iran", the first source said, adding that India could consider paying Iran for crude with the rupee currency. "So we did our job and more".

India, however, wants to keep importing oil from Iran, because Tehran offers discounts and incentives for them at a time when the Indian government is struggling with higher oil prices and a weakening local currency.

Crude oil prices stayed steady Friday after a volatile week that saw the highest prices in four years. Saudi Arabia at present produces 10.7 million barrels per day. The kingdom's production has risen from below 10 million barrels a day in the first five months of the year to about 10.7 million now, Mr Al-Falih said. "The tightness of oil supply means that prices are particularly susceptible to shocks, and implies that risks are firmly to the upside", said World Bank economist Cesar Calderon.

The kingdom has lifted production nearly to a record and might raise it again next month, although doing so will infringe on available spare capacity, limiting Saudi Arabia's ability to react to other supply shocks.

The billion-dollar question for the month is definitely who will fill in the gap for the Iranian oil that is about to be removed from the market due to another phase of USA sanctions.

Trump announced he would reimpose USA economic sanctions on Iran in May after walking away from Tehran's 2015 nuclear deal with world powers.


In May, Trump pulled the United States 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.

U.S. President Donald J. Trump has been pushing OPEC to prevent supply shortages.

It was the first time a USA official said the administration was in the process of considering waivers.

On Friday, news agency PTI had quoted sources to report Indian Oil Corp (IOC) and Mangalore Refinery and Petrochemicals Ltd (MRPL) have contracted 1.25 million tonnes of Iranian oil for import in November. Due to a US holiday, this is likely to keep the pressure on the markets through today's session.

Kenyan consumers will feel the pinch most, as a rise in oil prices would wipe out the relief President Uhuru Kenyatta pushed for last month after pump prices reached $1.28 in the wake of a 16 per cent tax on petroleum products.

"Chatter that Saudi Arabia has replaced all of Iran's lost oil" is weighing on prices, said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.

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