Published: Sun, October 14, 2018
Money | By Ralph Mccoy

Crude oil futures settle at $74.96

Crude oil futures settle at $74.96

Global oil prices rose about 1 percent on Tuesday on growing evidence of falling Iranian crude exports before the imposition of new USA sanctions, as well as a partial production shutdown in the Gulf of Mexico because of Hurricane Michael.

Brent crude fell $1.74 a barrel to a low of $81.35, its lowest since September 27, before recovering a little to trade around $81.70 by 0850 GMT.

The U.S. WTI (West Texas Intermediate) crude futures surged by 41 Cents or 0.5% and were at $74.70 a barrel.

Media reports suggest that India's largest refiner, International Olympic Committee is importing the "usual" monthly volumes of oil from Iran.

On the other hand, the country could be save some dollars as it will have to spend less in purchasing crude that it imports.

"We still estimate oil demand growing at 1.2 million to 1.5 million barrels per day for this year, and see the risk of a slowdown in 2019 if trade tension escalates", ANZ Research analysts said in a report.

The U.S. President has reaffirmed economic sanctions on Iran during his recent speech at the United Nation's General Assembly.

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The kingdom will invest $20 billion in the next few years to maintain and possibly expand its spare oil production capacity, Saudi Energy Minister Khalid al-Falih said this month. Iranian crude exports dropped down further in the last week, as per an industry source and the tanker data, since customers are looking for alternatives before the start of the US sanctions.

Should OPEC keep pumping at September's rate, the report points to an excess supply of nearly 1 million bpd in 2019 - although this is before any sizeable reduction takes place in Iranian output.

The South Asian nation was hoping to lift significantly higher volumes in the current fiscal year, after Tehran offered a discount on shipping and an extended credit period, before the US decision on sanctions changed its plans. OPEC and its allies "are ready and willing to continue to make sure that the market remains well supplied".

Crude inventories climbed by 9.7 million barrels in the week to October 5 to 410.7 million, compared with analyst expectations for an increase of 2.6 million barrels.

Iran has been selling crude at just over one million barrels a day for the past few years, mostly to China, India, Japan and South Korea.

Oil has rallied this year on expectations the sanctions, coming into force on November 4, will strain supplies by lowering shipments from Iran, OPEC's third-largest oil producer.

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