Oil prices are now trending downward, falling for a third consecutive week as global stock markets tumbled and oil markets focused on a weaker demand outlook for crude going forward.
Brent crude oil futures were down 8 cents, to $77.54/Bbl at 1:38 p.m. ET, dropping roughly 6.3% this month, and threatening to post the worst decline also since July 2016.
The tight market in Asia is visible in the low amount of unsold crude oil stored on tankers on waters around Singapore and southern Malaysia, the region's main oil trading and storage hub. U.S. West Texas Intermediate (WTI) crude futures were at $66.99 a barrel, down 5 cents from their last settlement.
Previously private oil companies could buy oil only to export oil, officials said.
Hedge fund managers continued to liquidate former bullish positions in oil last week, with signs of short-selling appearing for the first time in over a year. One is led by National Security Adviser John Bolton, who wants the toughest possible approach, and another by State Department officials keen to balance sanctions against preventing an oil price spike that could damage the U.S. and its allies.
Oil market headwinds, perhaps even storm clouds are brewing over a slowdown in economic growth due to trade war tensions between Washington and Beijing, and a stronger dollar weighing on emerging market economies, with those countries seeing an exodus of currency for higher yielding, safer havens like the US Dollar and Japanese Yen.
Oil production from Russian Federation, the United States and Saudi Arabia reached 33 million barrels per day (bpd) for the first time in September, Refinitiv Eikon data showed. A stronger dollar also increases the price for oil import dependent countries, with India, the Philippines, Indonesia and others particularly vulnerable. "The market in the fourth quarter could be shifting towards an oversupply situation as evidenced by rising inventories over the past few weeks", Adeeb al-Aama told Reuters.
Even with United States sanctions on Iranian exports due to come into force on 4 November, oil prices have fallen about $10 a barrel since four-year highs reached in early October. Iran is expected to do everything to make the purchase of oil as easy as possible for the biggest oil consumers in the market.
In July, First Vice-President Eshaq Jahangiri said Iran would be looking to offer oil via the stock exchange to counter the USA sanctions on the country's oil exports.
Sanctions apply not just to American businesses but to non-American businesses and individuals as well.
An exchange shop displays rates for various currencies, in downtown Tehran, October 2, 2018. While a number of industry experts expect that foreign firms will still face penalties from the USA for trading with Iranian businesses, as a breach of sanctions, most there are still good prospects that Iran's action will be far from ineffective.