Published: Tue, October 09, 2018
Money | By Ralph Mccoy

Oil prices steady after Iranian exports fall further

Oil prices steady after Iranian exports fall further

Iran's crude exports fell further in the first week of October, according to tanker data and an industry source, taking a major hit from US sanctions and throwing a challenge to other OPEC oil producers as they seek to cover the shortfall. "Some of our companies have already nominated their quota for November", said the Minister for Petroleum and Natural Gas, while referring to import of Iran's oil by Indian companies.

The Indian orders have reportedly been placed by Indian Oil Corp (IOC) and Mangalore Refinery and Petrochemicals Ltd (MRPL).

Oil prices held little changed on Tuesday, as more evidence emerged that crude exports from Iran are declining in the run-up to the reimposition of USA sanctions, while a hurricane moved across the Gulf of Mexico.

"Likely, India and Iran will agree to use Rupee payments instead of USA dollar payments, something already tried between 2013 and 2015, with Iran then using Rupees to import food, medicines and other commodities from India", said Leszczynski.

In an interview with Russia's Sputnik news agency, Iran's Deputy Foreign Minister Abbas Araqchi warned of the "serious effects" of the upcoming United States sanctions against Iran on oil prices and the entire Middle East.

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The news of India's continued importation of Iranian crude had a positive effect on oil prices, with Brent crude down 1.6% to $82.79 at the time of writing on Monday morning. Oil companies have been tight lipped about Iran imports. At the same time, as a report in The Times of India said, there was no clarity on whether New Delhi will get a waiver from Washington. Currently, India heavily relies on Iran for crude oil imports.

Oil also dropped as investors focused on rising output from other producers, such as top exporter Saudi Arabia, to compensate for lower Iranian supplies which have fallen further in October according to export data.

"Iran's oil can not be replaced by Saudi Arabia nor any other country", Zanganeh said, according to his ministry's website.

The cost of the Indian basket of crude rose to $84.14 a barrel on 5 October, according to the Petroleum Planning and Analysis Cell. The Indian basket represents the average of Oman, Dubai and Brent crude.

Pradhan said he had urged Saudi Arabia's oil minister to keep in mind the interests of oil consuming countries when it came to higher prices. Many BJP-ruled states have also cut the value-added tax (VAT) on fuel by an equivalent amount.

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