Oil prices have come under downward pressure from rising supplies, even though Iranian exports are expected to fall because of new US sanctions. In August, a surprise surge in output meant the country briefly overtook Russian Federation as the world's biggest crude producer, with output of 11.3 million barrels a day.
US President Donald Trump's administration in May reinstated all sanctions lifted under the 2015 nuclear deal, targeting both Iran and countries that trade with it in oil, financial transactions with its Central Bank and the country's port sector. The Organization of Petroleum Exporting Countries also pledged to offset any supply gaps. Now, with the United States midterm elections over and crude futures wilting in the face of another historic shale oil surge, the cartel will discuss a change of course this weekend.
The sanctions reimposed on Iran's oil exports - its main revenue source - and financial sector were triggered by US President Donald Trump's May 8 decision to abandon the 2015 worldwide deal created to block Tehran's development of nuclear weapons. Total volume traded was nearly double the 100-day average.
Brent futures for January settlement climbed 76 cents to US$72.89 on the London-based ICE Futures Europe exchange, after falling 1.4 per cent on Tuesday. The global benchmark crude traded at a $9.85 premium to WTI for the same month.
With the 180 day grace period coming to an end on Monday, U.S. Secretary of State Mike Pompeo and U.S. Treasury Secretary Steven Mnuchin announced the return of U.S. sanctions on Iran.
Preventing oil prices from rising any further has been a relentless rise in United States crude output, which hit a record 11.6 million bpd in the week ending November 2, according to Energy Information Administration (EIA) data released on Wednesday.
At the same time, industry data was said to show that nationwide oil inventories rose by 7.83 million barrels last week, while a median estimate in a Bloomberg survey of analysts expected a 2-million-barrel increase ahead of government data Wednesday. US waivers for Iranian oil purchases are likely to be more extensive than the market expects, with the combined range seen at 1.2 million to 1.7 million barrels a day, FGE Chairman Fereidun Fesharaki said in a note.
The Hindustan Times had earlier reported Chabahar had been possibly given an exemption as it had not figured in the comprehensive list of 700 sanctioned Iranian individuals and entities - 400 from the earlier rounds of sanctions and 300 new - that was published by the USA treasury department on Monday. Off-topic, inappropriate or insulting comments will be removed.